Fact Sheet

November 2004

CRA & 2D Bar Coding

For the 2005 tax filing season, the Canada Revenue Agency (CRA) will introduce the use of two-dimensional (2D) bar codes for the purpose of processing computer generated paper returns filed by some Canadians.

2D bar codes

Advances in bar code technology in recent years have enabled greater amounts of data storage and retrieval to the point where it is now possible to capture a personal income tax return in a single 2D bar code.

Using 2D bar codes at the CRA

Tax preparers who use certified tax preparation software to generate returns for individuals, but decide to print out the return on paper and mail it to the CRA instead of sending it electronically over the Internet will be the primary users of the 2D bar code system. For the following year, the 2D bar code option will be made available to individual tax filers.

When tax preparers decide to print a copy of the tax return for submission to the CRA, certified tax preparation software will generate a 2D bar code to be printed on the first page of the T1 Individual Income Tax and Benefit Return. This bar code will contain all of the individual identification and financial data necessary for the assessment of the return.

Once the return is received by the CRA, an operator will scan the 2D bar code using a laser beam scanner. The data will then be validated and processed by the same system used to process returns today. In the rare case where the scanning process is unsuccessful, the return will be resorted for traditional processing.

Improved efficiencies

The CRA will gain efficiencies from the process of entering tax information from a return into the system being much faster than the traditional keying method, while at the same time eliminating keying errors. Additional efficiencies will be gained from the returns having been prepared by certified commercial software packages.

Paper returns traditionally have a fall-out rate of 45% for additional processing requirements as opposed to the lower rate of between 3% and 5% experienced for electronically filed returns. It is projected that 2D read returns will benefit from this lower rate.

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