The Canada Revenue Agency wants more people to file their personal income tax returns online.
The agency has discontinued its free Telefile service that allowed people with basic returns to file by entering their tax information using the telephone.
The change is expected to affect about 300,000 people across the country and require fewer tax information packages to be mailed out.
Canada Revenue has also stopped mailing people who use the online service Netfile an individual access code.
It wants them to use their social insurance numbers and birth dates instead when filing their tax returns.
"We are modernizing our electronic processes to make them easier and more accessible for Canadians to use while maintaining the highest level of security,'' reads the agency's website.
"Our goal is to improve service, increase electronic filing and reduce compliance burden to Canadians.''
Agency officials declined an interview request Thursday on the policy changes.
Noel Carisse, an agency spokesman, wrote in an email that the push for more online filing would save the federal government money, but Carisse did not indicate how much.
"In 2011, printed packages for approximately 1.3 million individuals went unused,'' Carisse wrote.
"Further, it costs about four times more to process a paper return than an electronic return.''
The email did not address whether cutting costs was a factor in eliminating the Telefile phone filing service.
NDP national revenue critic Murray Rankin said the decision to cut Telefile will take people who have used the program for years by surprise.
He said the move will leave people who are not familiar or comfortable with using the Internet little time to get ready to file their return online.
Rankin also said some people will feel uncomfortable about using their social insurance number to submit their tax return using Netfile.
"A lot of people, particularly elderly and people who aren't as sophisticated on the Internet, simply don't want to have their personal information on the computer,'' he said.
"I think a transition needs to be much more thoughtful and gradual than what is being provided now.''
The Canada Revenue website says fewer people were using Telefile and almost two-thirds of Canadians now file their returns using services such as Netfile, either on their own or with the help of a tax preparer.
It says using Netfile allows the agency to process tax returns and send out refunds more quickly, in as little as eight business days.
Scrapping the Netfile access code will also speed up service without affecting security, the agency says.
"The Canadian Revenue Agency uses the most secure forms of encryption available today.
These are the same levels that your financial institution uses to protect your banking information.''
To use Netfile, people must either buy certified commercial tax software or find a free program.
These options are usually posted on the agency website, http://www.netfile.gc.ca.
Revenue Canada says certified products for use with 2012 tax returns are not yet available.
Taxpayers who prefer to process their T1 returns on paper can download the forms from the Canada Revenue website or pick up copies at Canada Post and Service Canada outlets.
Last year, the agency said it processed more than 25.4 million tax returns.
Carisse said the Canada Revenue Agency will monitor the changes to ensure that they deliver efficient and effective service to taxpayers.