Each year, the Canada Revenue Agency asks Canadians to file their taxes by April 30th. And each year, thousands of Canadians miss that deadline for a variety of reasons.
If you missed the deadline simply because you were busy or unprepared, you may owe more than you realized. Read on to learn about the dangers of filing late.
Any amount owed to the CRA is subject to a penalty of 5% compounded daily, and an additional 1% for each full month that elapses without filing a return. While the additional 1% has a maximum of 12 months, after a year the CRA can increase the late-filing penalty up to 10% of the balance owing.
Repeated failure to report income penalty
For those who fail to report amounts on returns for subsequent years, you may have to pay this fee, which is 10% of the amount that was not reported. This penalty exists on both a federal and a provincial/territorial level.
That said, if you tell the CRA about an unreported amount, the fee may be waived.
False statements penalty
The fine for having an omission or false information on your taxes can be large. The fee is $100 or 50% of the under/overstated credits related to the omission or false statements. Again, honesty is always the best policy and the CRA may waive this penalty if you voluntarily tell them about the omission.
There are many pitfalls to filing a late tax return, but the best way to avoid them? Be prepared. Consult Liu & Associates with any questions or concerns you have about your return. We can help you easily steer clear of these penalties and have your taxes filed by April 30th each year.