Although most of us make it a point to do everything possible to file our taxes on time, sometimes there can be an unexpected delay due to any personal situation resulting in you missing your tax filing deadline. Anyone who owes taxes to the Canada Revenue Agency (CRA) needs to complete their tax filing before the 30th of April for all personal income taxes. If the date falls on a holiday, the next business day is considered as a deadline. Self-employed people can still file their taxes until the 15th of June. However, the caveat to that is, if you owe tax, the CRA still needs you to pay on or before the 30th of April. If you don’t owe any taxes, you are liable for a refund or if you do owe taxes, the CRA expects you to submit your filing before the 30th of April each year. If you miss the deadline, it can have grave consequences in terms of penalties for late filing. Here are some penalties that you may have to face if you do not file your taxes on time
Penalties for late tax filing
Generally, if you are getting a refund and your tax balance is zero, you can be relaxed as you may not be penalized for late filing. Still, late filing can impact the benefits that you will be getting from the CRA. For example, if you are receiving the Canada Child Benefit, not filing your taxes on time may result in you not receiving your benefit payment on time.
In the case where you have an outstanding balance, the penalties for late filing can be exorbitant, especially if you are late by several months. Typically, the penalty for late filing is 5%, but the CRA adds another 1% for each late month. So it is still a good idea to file your taxes as soon as possible to avoid the additional late month penalty for every month.
For filing your tax return late chronically, you may be subjected to even more severe late filing penalties. For example, if you have filed your tax return late in any of the previous three years, you can face a penalty of 10% plus an additional 2% of the balance that you owe for every month your tax return is late until about 20 months.
Usually, the CRA will only charge you penalties on the balance you owe. It is best to consider paying off even a portion of balance if possible. That way, you will still end up saving on the penalties.
Although the rules and regulations surrounding late filing penalties are strict, in many cases where circumstances may be beyond your control, the CRA is likely to waive or cancel late filing penalties. You can apply to have your late filing penalties waived through their online portal or complete and mail form RC4288 – Request for Taxpayer Relief. You still need to send any supporting documents for the request to be considered. If you are late in filing your taxes and need help to claim a fine waiver or to file your taxes now, contact Padgett Business Services, Toronto’s best services for taxation help and assistance.