Every year it is estimated that 3 Million Canadians do not file their taxes on time. As Income Tax Preparers, this is a staggering number.
The Canada Revenue Agency (CRA) encourages filing on or before the deadline of April 30th for T1 individuals, and June 15th for small business owners. T2 Corporate tax are due 6 months after the end of their fiscal year. So, what if you missed the deadline? What if months or years have gone by since you last filed your taxes?……. Whether you are filing personal tax, small business or corporation, filing late is better than not filing at all.
Admittedly, there aren’t too many people I know, that enjoy filing their taxes. Tempting as it may be, procrastinating will only make it worse. Often the burden of calculating expenses, collecting receipts, having lost slips, or paying a debt owing to the government is more than enough reason to delay filing.
If your tax balance is zero or you’re getting a refund, you can breathe a sigh of relief, you won’t incur penalties for late filing. It is important to note that filing late can delay your government benefits; for example, if you qualify for the Canada Child Benefit or HST credit and don’t file on time, you may not receive your payment on time.
If you have a balance owing, the penalties for filing late can be quite steep, and often a burden. The current late filing penalty is 5% of your balance owing, plus an additional 1% for each month your return is late, up to 12 months. If filing late is your only option, it is a good idea to file as soon as you can to avoid racking up that extra 1% penalty per month.
There are larger penalties for chronic late filers, a status with the CRA you never want to hold.
On the bright side, there is some reprieve for those who owe a balance to the CRA. If full payment for outstanding debt puts you in financial hardship, you do have a few options. Firstly, you can choose a monthly payment plan set forth and agreed upon between yourself and the CRA. You also have the option in paying in a few installments. The government will accept any attempt at payment. DO NOT think this debt will go away, and that you can delay paying…. I will explain why in another blog post.
Paying what you can does not mean you will no longer accrue interest, but you will only pay interest on the outstanding debt. Furthermore, there is an interest relief program available to Canadians if you do end up owing money to the CRA. This situation does not apply to everyone, and it is not a guarantee, but if you must file your return late because of circumstances beyond your control, you can apply to have late penalties waived. Check out : RC4288 Request for Taxpayer Relief with CRA for further details.
In Summary, if you have been delaying filing your taxes, for whatever reason, we here at the SheDo Tax Company would be happy to help you get your taxes on file, up to date and without judgement. We understand that life gets in the way, other priorities sometimes trump getting your taxes in on time. You can put your trust in us, and believe us when we say, you are not the only one who has Fallin’ Behind.
We are always here to help you!