What Happens If You Fail To File Your Taxes On Time?Brian Jang ON March 23, 2016
Are you freelancer? Do you own your own business? Then there is no doubt you’ve got your hands full—calling the shots, making the schedule, and meeting the needs of your customers. With so much going on, it can be easy to forget to file your taxes on time. Sadly, putting your taxes on the back burner won’t make them go away. It will only make the situation worse. So, if you want avoid paying any penalties, you will need file on time.
When is the deadline for filing Canadian taxes?
For the majority of taxpayers, April 30 is normally the due date for income tax returns. But because April 30, 2016 falls on a Saturday, the due date to file your 2015 taxes is Monday, May 2, 2016. If you are self-employed, however, you have until June 15, 2016 to file your 2015 personal tax returns, but any amounts owing must still be paid by May 2nd. If you miss the due date, here are few things you’ll need to do.
Late filing penalties in Canada
The penalties for neglecting to file your taxes can be harsh, especially if you ignore it for months after the due date. If you owe money and fail to meet the deadline, the Canadian Revenue Agency will charge you a 5 percent interest rate on the total amount, plus an additional 1 percent increase for each month of unpaid debt, up to a maximum of 12 months. Failure to file your taxes on time in the future will lead to even higher penalties, starting at 10 percent of the balance owing.
Interest Charges For Filing Your Taxes Late
The Canadian Revenue Agency charges compound daily interest on any unpaid balances owing. Additionally, the CRA will charge you interest on the penalties, effective the day after your return is due. Plus, every three months, the rate of interest is subject to change. Good for them—not so much for you.
Failure to pay your taxes can result in severe legal action. For example, the government can not only put a lien against your property, but also garnish your salary or wages.
What are good reasons for filing a request for taxpayer relief?
The bottom line here is simple—get your taxes filed on time. Even if you can’t pay everything upfront, you can always work out a payment plan later. If filing your taxes on time is unavoidable, you can file a Request for Taxpayer Relief with the CRA. Some of these reasons may include accidents or illness, the CRA did not inform you within a reasonable time that an amount was owing, or in the event of financial hardship.
Contact BCJ Group, Chartered Professional Accountants for a free consultation today!