Every tax season, we see a number of new clients who have several years of returns to file. Often, they have not filed their returns because they think they owe money but if this is the case avoiding your taxes will do you more harm than good.
The CRA views overdue items in two distinct ways – a) compliance and b) collections. The first option requires you to file your return on time. The second results in two different charges – late filing penalties and interest. If you are late filing and owe money you could be liable for both.
If you avoid filing your taxes on time it could actually make the charges increase rather than minimize them. For example, if you file 12 months late, you’ll be charged 17% on the balance owing, plus interest on penalties dating back to the original deadline.If this is your second offence and you have been late filing in either 2013, 2014, 2015 or 2016, the current penalty may go up to 10% of your 2018 balance owing, as well as an additional 2% for every month you’re late up to 20 months maximum. Payments that you do make will be applied to the previous years that you owe first. If you have a balance owing for 2018, your payment has to be received by the Canada Revenue Agency on or before the tax deadline in Canada on April 30, 2019.
If you do miss the April 30 Tax Deadline but don’t owe any taxes, you won’t have any late filing penalty or interest to pay, but that still means that the CRA will hold your refund until you actually file.So even though you may dread owing the CRA money, do not avoid filing on time so that you can save yourself from having to pay more.
Need Money? Should you Withdraw from your RRSP?
Over-contributed to your TFSA or RRSP? Here’s what you should do.
Will Covid-19 Relief Measures Affect my Taxes?
How to Close your GST Account with the CRA
What are the Penalties for Filing a Late GST/HST Return?
When can you Expect your Tax Refund this year?
Are you one of the Almost 50% of Canadians Taking Advantage of the Tax Deadline Extension?
The CRA has $1billion in Uncashed Cheques