Life can sometimes lead us down unexpected paths, causing us to overlook important deadlines, such as the personal tax filing deadline. If the deadline for tax filing has passed and you failed to file your tax return by the deadline, there are still a few important things to know or keep in mind:
- Late Filing Penalties: If you fail to file your tax return by the deadline, you might be subject to a late filing penalty. The penalty is usually calculated as a percentage of the balance owing on your return. The penalty is 5% of the balance owing plus 1% of the balance owing for each full month that the return is late, up to a maximum of 12 months.
- Interest Charges: In addition to the late filing penalty, the CRA may charge interest on any outstanding balance owed. The interest is compounded daily and is based on the prescribed interest rates set by the government.
- If you have filed late in the past three years: The penalty doubles, 10% of income you failed to report in the current year plus 2% per month to a maximum of 20 months.
- If you have been ill or there are other circumstances beyond your control that kept you from filing on time, you can apply for a break. The CRA may consider waiving or reducing penalties and interest if you have a valid reason for missing the deadline. You would need to provide supporting documentation and apply for relief.
- Penalties apply only to those who owe taxes: Nonetheless if you have filed late, your refunds may be delayed.
- Business Owners and spouse: If you (or your spouse or common-law partner) carry on a business, you have until June 15 to file your return, but you still have to pay any balance owing by April 30.
- Keep your records: You need to keep your records for at least six years to support your claims, in case the CRA selects your return for review.
It’s important to be aware of the specific tax deadlines for your situation, which can vary depending on factors like your filing status, the type of income you earn, and whether you’re self-employed. To avoid penalties, it’s advisable to file your taxes on time and to reach out to the CRA if you anticipate any difficulties in meeting deadlines.
For the most accurate and up-to-date information on tax penalties in Canada, consult with the tax professionals at LedgersOnline.
Source: Canada Revenue Agency