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 the year. This includes any balance owing if the CRA reassess your return.
- The late-filing penalty is 5% of your 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 the current year may be 10% of your balance owing, plus 2% of your 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.
Even if you cannot pay your full balance owing on or before the deadline, you can avoid the late-filing penalty by filing your return on time.
Keep 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 during the tax year, your return has to be filed on or before June 15. However, if you have a balance owing for the year, you have to pay it on or before the April 30 deadline. We recommend that all sole proprietors have their tax returns ready to go for April 30 just to be safe.
Find out how to pay the CRA here.
Happy tax season!