Tax time is once again upon us, and the chore of preparing and paying your taxes is nigh. Remember that the due date for paying your taxes is April 30th. If you don’t file by then, you will get a penalty of 5% plus 1% per month (up to 12 months) you don’t file. Sadly, many people don’t pay because they think they are going to owe, and that’s a big mistake. You’re much better to file your taxes and then work out a payment plan with Canada Revenue Agency (CRA). When filing your return, you may have a balance owing on line 485. Generally, if this amount is $2 or less for 2017, you do not have to make a payment.
Ways to Pay Your Taxes
You can pay in various ways to CRA:
What If I Can’t Pay in Full
If you cannot pay the full amount you owe now, take action by contacting the Canada Revenue Agency (CRA) right away. Ignoring your debt does not make it go away. In fact, waiting may make any financial or legal consequences more serious. The CRA may also charge interest compounded daily at the prescribed rate on any amount owing until your balance is paid in full. The CRA will work with you to resolve your tax debt or other government programs debt, though they could change their minds and demand payment in full at any time.
A payment arrangement is an agreement you make with the CRA. It allows you to make smaller payments over time until you have paid your entire debt including applicable interest. Before you make a payment arrangement, you may need to show that you have tried to pay your debt in full by borrowing money or reducing your expenses. To figure out your ability to pay, we may ask you to provide proof of your income, expenses, assets, and liabilities. You may have to do this by telephone or by completing a financial questionnaire. The Payment Arrangement Calculator lets you calculate payment options and it includes the prescribed Canada Revenue Agency interest rates. The Income and Expense Worksheet will help you to calculate your available net income to pay your debt.
Financial hardship provisions
If your debt repayment makes it difficult for you to pay for housing, food, utilities and other necessities of life, you may qualify for help under the financial hardship provisions.
It is your responsibility to contact the CRA if repaying your debt is causing you financial hardship. The CRA will take your situation into account when reviewing your request.
For more information and to see if you qualify, call 1-866-864-5823
Insolvency or bankruptcy
If you feel you are insolvent or are considering bankruptcy, visit the Office of the Superintendent of Bankruptcy for more information.
Taxpayer relief provisions for individuals
In some circumstances, you may be able to ask for relief from penalties and interest charges and reduce the overall amount you or your business owes. For more information, and to see if your situation qualifies, see Taxpayer relief provisions.
In the end, you need to file your taxes and ensure you pay in full by April 30th. If you find yourself unable to make a full payment, file your taxes and then contact CRA to make a payment arrangement.
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?
How to Retire the Right Way
Is a Registered Education Savings Plan (RESP) Worth it?
What Child and Family Benefits are Left?