What Can Happen If You Submit Your Taxes After the Deadline?Brian Jang ON July 15, 2019
It’s common to see people rushing at the last moment to get their taxes done and submitted before the deadline. Although there is plenty of time to get them done, many will put off their taxes until the final moments, then panic about potentially submitting late.
But what exactly are the consequences of submitting your taxes after the April 30 deadline?
When You Do Not Owe Taxes
If you fall behind in getting your taxes done and miss the deadline of April 30, then your best-case scenario involves not owing any taxes. If this is the case, you can relax knowing that there will not be any penalties charged for a late filing. And provided you don’t have a pre-existing balance owing, you won’t have any interest to pay.
If you are owed a refund, however, the Canadian Revenue Agency (CRA) will hold onto it until you can actually submit your completed return. This may also impact family members. A spouse or common-law partner may find that they also need to wait for their refund or tax credits if they are dependent on information in your return. Some examples of this might include the GST/ HST credit, or the Canada Child Benefit.
When You Owe Taxes
If you do happen to owe taxes to the CRA, then missing the filing deadline will carry some penalties. For example, if you owe taxes for the 2018 tax year, you will be charged not only a late-filing penalty, but also compound daily interest, starting on May 1st of 2019.
In the event that you have a balance owing from previous years, you will also be charged compound daily interest on that amount. Once you begin making payments, they will be applied first to the balance owing from previous years, starting with penalties and interest.
The manner of calculating penalties for late filing is as follows:
- 5% of the balance owing as a late filing penalty
- 1% of your balance owing as an additional penalty for every full month that you are late (with a maximum of 12 months)
- Interest charged on the above
- Compound daily interest on your balance owed, following rates determined by the CRA
The CRA may, at their discretion, double the late filing penalty for each late filing if you have a history of filing late and have previously been assessed a penalty. Further, the penalty for each additional month that you are late will increase, starting at 1% each month to 2% per month, up to a maximum of 20 months.
Deadlines for the Self- Employed
It is common for those who are self- employed to find themselves with a balance owing. This is because unlike salaried individuals, their income is not deducted at the source. While those that are self- employed have a filing deadline of June 17th, their balance must still be paid by the April 30th deadline.
Clearly, your best bet is to ensure that your taxes are completed and submitted by April 30th. While few can say they enjoy filing a return, doing so on time is certainly preferable to paying unnecessary penalties for being late.
- Registering for the GST Retroactively
- Which Canadian Business Structure is Right for You?
- The Gig Economy in 2020: Tips for Saving Taxes
- How the Government is Helping Seniors During the COVID-19 Pandemic
- The True Costs of Everyday Expenses