Last Minute Tax Tips
“WHEN IS MY TAX RETURN DUE?”: LAST MINUTE TAX TIPS TO AVOID THOSE PENALTIES
The dreaded last minute sprint to the tax filing deadline; we’ve all been there. Psst! Have you filed yours yet? Here are the most frequently asked questions about tax time, plus, a roundup of tips and resources to get yours done–this week.
WHEN IS THE CANADIAN TAX RETURN DEADLINE?
Short answer: April 30th.
Long answer: June 15th, for self-employed individuals and their spouses. However, April 30th is still the deadline for all GST or HST owed!
CAN I FILE MY TAX RETURN LATE?
If you owe tax and file your income tax return late, you will be charged interest as well as penalties by the Canada Revenue Agency (CRA). If you owe tax, but don’t have enough money to pay it, the CRA still recommends that you file your return on time!
WHAT IF I DON’T OWE ANY TAX?
If you don’t owe tax and file late, you won’t be charged any interest or penalty. But if you’re not absolutely certain that you will be getting a tax refund, it’s a good idea to file on time, especially since filing late can delay certain benefit program payments.
WHAT ARE THE CONSEQUENCES OF FILING LATE?
Penalties amount to 5% of the balance owed, plus an additional 1% for each month you are late. That means, if you file your taxes next month but before a full month has passed since the official deadline, you will be charged 5% of what you owe. However, if you file after May 30th but before June 1st, you will be charged the additional percent.
In addition, you will be charged interest, which is compoundeddaily (!) at their quarterly Prescribed Interest Rate. This interest is on your entire balance plus the penalties you’ve accrued. So even if you are late to file, it’s best to file as soon as possible!
WHAT IF I DON’T HAVE ENOUGH TO PAY THE CRA?
File your tax return on time! After that’s done, you can work out a payment plan with the CRA. You’ll still have to pay the daily interest, but at least you won’t have to pay the penalty for late filing!
If you are late and can’t afford to pay all of your taxes, try to at least pay off a portion of your balance. The CRA only charges penalties on what you owe, so shrinking your balance means you’re also shrinking that penalty.
WHAT IF I HAVE A REALLY GOOD REASON FOR NEEDING TO FILE MY TAX RETURN LATE?
Under special circumstances, you can apply for taxpayer relief. This will waive all penalties and interest. You will still owe the original balance, though! To qualify, your request for relief must be a result of circumstances outside of your control, such as a medical emergency, mental distress, natural disaster, or CRA error or delay. That being said, the decision to grant relief is up to the CRA’s discretion, so it’s important to make a strong case with supporting documentation and clearly state why you should be granted relief.
Thankfully, your local Chamber of Commerce has members that can guide you with your relief application–or even better, help you file your taxes on time! They are Certified Professional Accountants (CPA) who serve individuals, sole proprietors, and businesses.
In addition, a CPA can help you navigate complicated tax situations, help you find areas to claim tax deductions, and some can even help you with budgeting and planning. Contact them today to see if they’re the right fit for you!