As tax season approaches, do you treat April 30th like more of a guideline than an actual deadline for filing your tax return? If you do not owe the Canada Revenue Agency (CRA) any money, then April 30 certainly is a guideline. However, if an amount is owed to the CRA and you miss the April 30th deadline to pay, you may find yourself in unnecessary trouble.
The following list outlines the consequences of filling a late tax return:
1. Penalties and Interest
If you have a balance owing to the CRA, compound daily interest begins on May 1st. Additionally, the CRA charges interest on the penalties. Late payment charges start at 5% of the amount owing, plus 1% of that balance for each late month.
2. Loss or delay of benefits
Even if you do not owe CRA any money, a delayed tax return may result in a delay of your benefit payouts. GST credit or Child Tax benefits, for example.
3. A higher risk of being audited
If you report false information, don’t pay taxes or neglect to file any return at all, the Government of Canada can start investigating. Audits can be lengthy and punishment is severe.
4. Potentially publicizeD information
The CRA doesn’t shy away from publicizing your case if you cheat on your taxes or end up getting fines or imprisoned. The Convictions section of the CRA website details cases of Canadians who have done just that. This is to show other Canadians what could happen and to help increase compliance.
5. Jail time
It may seem like a stretch, but some Canadians do wind up serving jail-time for tax evasion. Many cases are settled out of court but if a case ever goes to criminal trial, the conviction rate is 98 per cent.
Consider all of this and bear in mind that taxpayer relief exists for individuals who are unable to file their taxes on time due to inability to pay, serious illness, disasters or even CRA error. For the average taxpayer: filing your tax return a day late may not mean much in the moment, but bad habits can add up to pricey consequences. Contact the experts at Liu & Associates today for help!