2008 Quebec NETFILE Study

Prepared for the:
Public Affairs Branch
Canada Revenue Agency
FINAL REPORT
March 2008
POR# 304-07
Contract #46558-086866/001/CY

Prepared by:
Corporate Research Associates Inc.

Le rapport complet en français sera fourni sur demande.

To request a full copy of this report, please contact Library and Archives Canada at:
613-996-5115 or 1-866-578-7777 or www.collectionscanada.ca

Media Enquiries:
Media Relations
Canada Revenue Agency
4th Floor 555 MacKenzie Avenue
Ottawa ON K1A 0L5
media.relations@cra-arc.gc.ca

Executive Summary

Background

Corporate Research Associates Inc. (CRESA) conducted the 2008 Quebec NETFILE Study on behalf of the Canada Revenue Agency (CRA) to better understand reasons for the lower incidence of electronic filing historically recorded in the Province of Quebec. Forty-three percent of all 2005 tax returns were filed electronically in Quebec, below the national average of 56 percent. The current study sought to identify reasons explaining the lower usage of NETFILE in Quebec compared to the rest of the country, understand the relative influence of selected barriers to file electronically, and assess ways to address the most pressing barriers.

Methodology

A telephone survey of 2,104 Canadian residents (including 526 Quebecers) was first conducted to identify differences and similarities between Quebecers and the rest of Canadians on these tax matters. Subsequently, a total of six (6) focus groups were conducted in three (3) locations (Montreal, Sherbrooke, and Québec City) to further explore opinions and perceptions.

Key Findings and Conclusions

Overall, findings from the 2008 Quebec NETFILE Study suggest that no one factor clearly explains the lower usage of electronic tax return filing methods in Quebec as compared to the rest of Canada. Influential factors may include a combination of the lower Internet access incidence in Quebec, the marginally lower level of awareness of electronic filing methods, and the fact that a federal as well as a provincial tax return is required in Quebec. In addition, taxpayers’ general perception that the process itself has complex aspects may hinder their desire to switch. Among these considerations, it is recommended that the CRA address the lower awareness level of electronic filing through a marketing campaign targeted at Quebecers who either file their own return by mail, or those relying on someone else to complete their return.

Opinions with respect to the process of completing a tax return online are consistent across the country, with approximately six-in-ten believing either that preparing a tax return using tax software is complicated, or they do not know if it is complicated or not. Focus group discussions indicated that taxpayers who do not use this method of filing know little about the process, and perceive it to be akin to completing a paper tax return, but electronically. The lack of familiarity with whether or not back-up documentation needs to be mailed and whether or not software is required to complete a tax return electronically further contributes to their hesitation. It is understandable, therefore, that they are more inclined to be sceptical when confronted with arguments trumpeting the simplicity of online filing.

As such, the CRA could benefit from informing and educating taxpayers concerning the advantages resulting from electronic filing methods, both for taxpayers and for society in general. Convenience, speed, simplicity, and positive financial and environmental impacts would be useful messaging avenues to explore. This is especially warranted given quantitative results indicating that Quebecers who submit their tax return online are more likely than other Canadians to do so for the ease, efficiency, and simplicity offered by this method. Communicating the prevalence of electronic filing in Canada may also contribute to reassuring taxpayers with respect to the simplicity and security aspects. The CRA should also consider developing tools and resources (such as a ‘step-by-step’ guide) to inform and assist taxpayers when completing and filing a return electronically.

To a certain extent, the cost of software also appears to be a deterrent to electronic filing. The CRA may wish to consider initiatives to address this barrier, especially for first-time users. Promotional offers/discounts on software, offering a free alternative, or giving a tax credit could motivate first-time users. Alternatively, the CRA should consider promoting the advantages of using tax software in contrast to completing a paper copy of the return. The enhanced prospect of all possible deductions being identified via software preparation, may also serve to overcome, at least in part, the perceived financial cost barrier.

Quantitative results indicate that the level of trust in the government’s online filing system is consistent and fairly high across the country. That being said, taxpayers expressed hesitation during the focus group discussions concerning how safe their personal information might be when entered on their own computer, transferred over the Internet, and then handled by the CRA and subsequently stored on its network. Security of personal information is clearly a concern the CRA should not overlook when promoting electronic filing methods.

Recommendations

In conclusion, as it moves forward in the development of initiatives targeted at Quebec taxpayers to increase usage of electronic filing methods, the CRA should consider a multi-faceted approach. Addressing awareness levels, security concerns, financial costs of completing a return electronically, as well as facilitating the process itself, all require consideration. Additionally, understanding the role of tax professionals in the choice of filing method may provide additional clues to explain the choice of current filing methods.

Date modified:

2008-08-18