The answer to that is, of course, YES! If you are several years behind, now is definitely the time to get caught up on your filings. Even if you’re thinking about this right in the middle of tax time, you want to get caught up as soon as you can on your filings for prior years.
If you are employed and haven’t been contacted by Canada Revenue Agency (CRA) yet, then it’s more than likely you don’t owe them money and will be getting refunds. CRA has already done an estimate on your return based on the slips that were filed by your employers, and others.
If you’re self-employed and haven’t filed since starting the business, then you’re probably flying somewhat under their radar, however, you still want to file, especially if you are registered for GST/HST and have kept that up-to-date.
If you are self-employed and were filing, but then stopped. Then, you more than likely have been asked to file by CRA. If you didn’t file after those requests, CRA now just assesses you based on prior years’ gross income; CRA knows your sales based on what you filed with those returns. The same for GST/HST, they will file based on prior years.
If you haven’t been asked to file, then you’re just not on their radar yet, and it’s best to get caught up before you do.
Of course, it also depends on how long you haven’t filed your taxes. A couple of years probably won’t be as big a deal as, say 10 years, however, it will depend on how much you owe. If you haven’t filed in 10 years, then you definitely need to look at the voluntary disclosure program which allows you to come forward and file taxes or adjustments to prior years without incurring penalties or being prosecuted. This program applies to income tax and GST/HST.
If you have been assessed by CRA for your income tax or GST/HST, then it’s best to get everything caught up ASAP. As far as CRA is concerned you’ve filed and are now owing this balance, whether it’s right or not. You will more than likely not owe as much as CRA thinks.
The first thing to do is contact a tax preparer/accountant, as I’m assuming you’re behind because either you don’t want to do it or am just not able to do them. The good ones, such as myself, won’t chastise you (well not too much) and will guide you through what they need to get your taxes done.
Now, if you are employed and can’t find your slips, then call CRA (1-800-959-8281) and you can get copies of your slips for the years you need to file. You could also go back to your employer(s), etc. and get copies from them. The best option is to sign up for My Account, and then you have access to most slips that were filed for you. Plus, any other information CRA may have, such as Notices of Assessment for prior years, and what returns are actually overdue.
Once you have all that information you can get all the returns prepared. Also, let CRA know that you are getting all the information together so you can file the back returns and get caught up on all your taxes.
For the self-employed person, it’s a little more complicated. You can also go to CRA and get all slips filed, however, you also have to gather up all your receipts for the business, and, hopefully, you have all of those.
We didn’t get into penalties and interest on this post. If you did owe, money for those prior years, then you will have penalties and interest applied from the date the amount owing was actually due. This can add up.
Are you Planning to Give Gifts to Your Employees this Holiday Season? Do You Know What is Taxable?
How Can You Participate in the Government’s Home Buyer’s Plan?
Buying or Selling a Home? Tax Information You Should Know
Renting Out Your Mortgage Helper? – The Taxman Cometh
Avoid These Common Mistakes When Claiming Charitable Contributions
What Can I Deduct as a Business Expense?
Why does Your Marital Status Matter for Taxes?
Should I Teach my Kids About Taxes?