Income tax is an unfortunate fact of life for just about every Canadian. The system lets the government tax away up to one-half of our hard-earned dollars, and to make matters worse, forces individuals to labor through a sea of forms to figure out how much they must fork over each year.

True, if you do not owe income tax to the government because you had the correct amount of tax deducted at source on your pay cheques and you had no other income, you don't have to file a tax return. But the only way to be absolutely sure and thus that the right amount of tax was deducted — and that you don't owe tax to Ottawa and your province — is to, of course, do your tax return.

The task is pretty well inescapable. In the past, if you had an aversion to forms and/or were intimidated by the tax system, you simply handed the job over to an expert, who charged you anywhere from $25 to $2,500 or more for the service, depending on the complexity of your financial affairs.

In today's computer-assisted age, however, you can do your taxes on your personal computer. True, some basic knowledge of the tax system is a help, but the newest generation of income tax software is a snap to use. As long as you buy a consumer version of one of the major manufactures' products — most of them also sell versions for tax professionals — you should be able to wade through the electronic version of the federal tax return and its oodles of forms, schedules and other documents.

What's more, the cost is minimal: $25 to $50, depending on the program and place of purchase. And several products are available by downloading from an Internet site.

QuickTax

As with any are of consumer products, some tax programs are easier to use than others — and that's important, given the complexity of income tax. If you only have to use a piece of software once a year, first and foremost it has to be easy to get used to — and quickly. Thus this software's name suggests one might get off to a promising start. Indeed, QuickTax lived up to its name.

QuickTax's makers, Intuit Canada Ltd., intended it to suggest one could get one's income tax done quickly, and also to be consistent with its flagship software product, Quicken, a financial organizer. As with the other programs, it does allow you to complete your return quickly.

But more important, of the three tax programs tested, QuickTax was the easiest to understand and get used to. Its screen presentation was the most pleasing to the eye, and it was a snap to move around the return's pages and schedules. For those to whom tax-return preparation is a foreign concept, QuickTax's EasyStep option is a big help. It takes you through the return, asking questions as if you were in front of an accountant.

You can quickly mouse-click past the (probably many) questions that don't apply to you. If you come upon a topic that does affect you, hit the "Yes" button and you'll be guided through the relevant form or schedule.

QuickTax is the easiest program to navigate through, whether jumping from return pages to schedules and forms, or simply scrolling through the tax return lines. A neat feature is the QuickGraphs window that lets you see where you stand as you complete the return. Bar charts show your total and net income as well as your refund or balance owing. It's a particularly useful if you're trying to determine how much of an RRSP deduction you should use for the tax year in question, since you can instantly see the effect of a bigger or smaller deduction on what you owe (or are owed by) the government.

CanTax

Another popular program is Cantax, which has been the first choice of many tax-preparation professionals for years. As such, however, it's a little less user-friendly than QuickTax. For example, its forms are less readable, the screen organization somewhat inefficient and the manipulation of windows occasionally cumbersome.

HomeTax

HomeTax is another widely used program, its promotion boosted by the Brain Costello marketing machine. But its screen presentation was even less inspiring than the CanTax view. And, unlike the others, it does not store all four pages of the T1 return in a single window. You have to open four separate windows. Having done so, however, it's fairly simple to click on each to go to a particular page. But if you're also referring to a number of schedules and forms, the screen clutter is something to behold — especially for laptop users.

Both CanTax and HomeTax are products of Softkey Software Products Inc. and, as with QuickTax, are available at most software stores and many office-equipment outlets.

All three programs are available in diskette and CD-ROM (multimedia) versions, and QuickTax also can be downloaded from the Internet at http://www.intuit.com/canada/quicktax/spdeal.

QuickTax requires less computer memory than the others: only two megabytes (MB) of random access memory (RAM), although 4 MB is recommended) and 4.5 MB of hard-disk space. The Mac version 4 MB RAM and at least 4 MB on the hard drive. The version tested was contained on a single diskette.

By contrast, CanTax needs at least 4 MB of RAM and 8 MB or disk space — and came on two diskettes — while HomeTax requires 4 MB of RAM and 11 MB on the hard drive — and requires a three-diskette loading process. Mac versions are not available for CanTax and HomeTax.

Another, perhaps less critical point: CanTax and HomeTax use Courier font — the old IBM typewriter typeface — while QuickTax uses the easier-to-read Arial, which like Courier is a standard Windows font.

Perhaps the easiest way to use any of tax program is to go straight to the T4 (employment income) and T5 forms (investment income) and fill them in. If relevant, you can also go straight to the business or professional income statements and key in details of such income and related (and tax-deductible) expenses. The information will be automatically transferred to the pertinent lines on the main T1 form

Grifftax

A fourth widely-used tax program is Grifftax, which as of this year's edition is available only by download from the Internet at http://www.griggtax.com. It is compatible with any personal computer's operating system, including Windows, Macintosh, OS/2, and Unix. However, the 1996 version was unavailable at the time this test was conducted, however. Tests of this software in previous years found it fairly easy to use.

Grifftax is manufactured by Colin Griffiths & Associates Ltd. of Carp., Ont. It was originally developed for Macintosh computers, the software for which is almost always user-friendly, thanks to the Mac's straightforward operating system.

It's worth noting that tax software doesn't provide an automatic link to Revenue Canada's EFILE system. To file electronically, you'll have to go through a registered EFILE agent. (Most tax-preparation firms and many accountants are registered.) The above four programs produce returns that are EFILE- compatible, which means you can submit your electronically-prepared returns on a diskette to the EFILE agent, who will charge a small fee to transmit your data to Revenue Canada.

Matthew Elder is personal finance columnist with The Financial Post in Toronto.