Tax software provider contracts out services to Magma: Grifftax expects higher customer use as consumer interest in e-filing of tax returns continues to rise

Almonte, Ont.-based GriffTax, a developer of software that assists users in preparing and submitting their income tax return, said it will rely on Ottawa-based Magma Communications Ltd. to provide its Internet and Web services, including online transaction security, anti-virus, firewall and spam protection for its e-mail system.

It's a critical two-year contract, since companies like GriffTax rely on a 24/7 online system that can allow customers to download the company's tax software without security breaches or server outages.

The move is especially important now as GriffTax secures most of its business during tax season, with peak periods in late April. The company expects a higher deluge of customers than ever before as consumer interest in e-filing continues to increase, as indicated by the Canada Customs and Revenue Agency's own statistics.

"What we need to see is ... proof that the provider understands the whole commerce side of doing business," said Paul Newcombe, vice-president of sales and marketing at GriffTax.

That means delivering uptime access to the company's Web site and a backup system with total redundancy, he said.

"If there's any known or planned outages as a result of them having to do work on their systems, we want them to advise us well in advance, and we want them to plan (the outages) around times that are totally non-critical."

AJ Byers, chief operating officer at Magma Communications, said his team is up to the task.

Magma has managed 200 to 300 firewalls, and is capable of offering security solutions for a small office right through to large-scale operations such as G8 summits, he said. At a recent G8 summit, Magma managed the full intrusion detection firewall service and put counter-measures in place as potential attacks were occurring, said Byers.

Security will increasingly become more of a factor in the tax software space, suggested Warren Shiau, research manager of software research at IDC Canada, who predicted that providers of tax software will continue to ramp up their transactional security standards in preparation for a future offering that would allow software users to submit their electronic return through a secure company-run portal.

The federal government continues to promote its EFILE and NETFILE programs, he said, adding the private sector will likely respond with bundled service offerings that allow customers to buy tax software packages and submit their returns through the same provider.

This means different variations of "transactional portals" will be created as e-filers go through their software provider to file their return, predicted Shiau.

According to Revenue Canada, electronic filing is on the rise. In 2003, 56 per cent of filers used a paper-based system compared with 62 per cent in 2002. Users of NETFILE, which allows users to file to the CCRA's Web site, went up to 11 per cent in 2003 from six per cent in 2001. Users of EFILE, which allows accountants to submit electronic returns to the CCRA through a secure channel, went up to 30 per cent in 2003 from 25 per cent in 2002.