Filing Your Taxes Late? Read This First
While filing your taxes late can feel stressful, it’s always best to take action and begin the process as opposed to letting it drag out any longer. Here’s everything you’ll want to know.
Canada’s Tax Deadline
However, if you’re self-employed and end up owing taxes, you’ll need to pay these taxes by the 30th of April. So, while self-employed Canadians can file their taxes by June 15th, filing before April 30th is likely the better option.
What Happens If You File Taxes Late?
Though, you should understand that by filing your personal taxes late, you may be subject to penalties, interest fees, and/or a temporary loss of some government benefits until your taxes are filed and paid.
Interest Fees and Late-Filing Penalties
This interest comes out to an extra 1% for each month that your taxes are late, up to a maximum of 12 months. In addition, the CRA will also charge a 5% late-filing fee if you file your taxes past the deadline and owe taxes.
If it turns out that you’ve filed late before on more than one occasion, the CRA may increase the late-filing penalty from 5% to 10% and they may charge an additional 2% (instead of 1%) on the amount you owe every month your taxes are late for up to 20 months.
Even if you are unable to pay your taxes at the tax deadline, filing your taxes regardless is a better option and will keep you from having to pay additional penalties or interest fees. If you’re unable to pay your taxes on April 30th, you can work out a payment arrangement with the CRA to pay off your tax debt (plus interest) over a longer period.
Is There a Penalty For Filing Late if You Don't Owe Taxes?
The Canadian government uses tax return information to help determine eligibility for certain benefit programs, and filing late could cause a lapse in those benefits to occur. So even if you don’t owe personal taxes for a given year, you should always file your annual tax return before the deadline, or as soon as possible after the deadline.
What Happens if You Don’t File or Pay Taxes?
If you do not pay or file your annual tax return, you may be subject to actions from the CRA that include:
- Wage garnishment
- Redirecting of benefit costs to pay your tax debt
- Asset seizure
And if you need any help filing your personal or business taxes late, don’t hesitate to reach out to Leonard Tam Professional Corporation.