Homeroom’s Alan Chau bursts into panic mode at the thought of a missed tax deadline…Lucky for him, the Canada Revenue Agency (CRA) opens the option to file online on February 20, 2017. So, he’s got some time in his hands…
Planning on forgetting to file your tax return on time?
It is mostly scary financially as the penalty can cost a hefty coin. Basically, your wallet will get the worst of it.
Here’s what will happen:
- The CRA will charge you daily interest starting one day after your return is due on any unpaid amounts owing for 2016. This includes any balance owing if the CRA reassess your return.
- The late-filing penalty is 5% of your 2016 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. If you were charged a late-filing penalty on a previous return eg: 2013, 2014, or 2015, your late-filing penalty for 2016 may be 10% of your 2016 balance owing, plus 2% of your 2016 balance owing for each full month your return is late, to a maximum of 20 months. That’s double the trouble!
- Your goods and services tax/harmonized sales tax (GST/ HST), including any related provincial credits, Canada child benefit payments (including related provincial or territorial payments), and old age security benefit payments may be delayed or stopped.
FYI: Since April 30, 2017, is a Sunday, your return will be considered filed on time if the received on or before May 1, 2017.
Even if you cannot pay your full balance owing on or before May 1, 2017, you can avoid the late-filing penalty by filing your return on time.
Keep an open and honest communication, and the CRA will be your BFF: agreeable, reasonable and understanding. But ignore or cheat them in any way and expect a pricey strike-back.
If you carried on a business in 2016, your return for 2016 has to be filed on or before June 15, 2017. However, if you have a balance owing for 2016, you have to pay it on or before May 1, 2017. We recommend that all sole proprietors have their tax returns ready to go for May 1.
Find out how to pay the CRA here.
Happy tax season 2017!