Is it Ever TOO Late to File Taxes?

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Whether you owe money to the government, or are expected a refund on your taxes, it can be too late to file your taxes.

The deadline for filing taxes in Canada is April 30th. If that date falls on the weekend it is then moved to the next business day. While you can file your taxes any time throughout the year, there are certain consequences for filing late.

These consequences depend entirely on whether or not you owe taxes to the CRA (Canada Revenue Agency) or if the CRA owes you a refund. Either way, filing late can cause serious disruptions in your finances.

If You Owe Money

If you owe money, and do not file your taxes or file them late, you can face a hefty penalty on the amount owing.

When you file late, or not at all, the CRA charges compound daily interest starting on the day after the due date (usually May 1st) on any unpaid amount. This includes any unpaid amounts from previous years.

The penalty for filing late is 5% on the total amount owing plus 1% for each month the return is late. This interest is calculated up to 12 months past the due date.

For example, if you owe $10 000 and file your taxes 5 months late, the CRA will charge 5% interest on the owing amount plus an additional 5% (1% for each month late). This means you will ultimately owe $11 000 on your taxes.

If You Are Owed Money

If you have money coming your way, you have up to 10 years to complete your return and receive your refund. Beyond that deadline, your refund is lost and cannot be claimed.

However, filing late even when you are receiving a refund may cause delays with your spouse or common-law partner if their refund depends on information from your return.

Another delay can occur if you receive benefit payments, such as the Canada Child Tax Benefit or the Working Income Tax Benefits, or a GST credit. Your payments may be interrupted since your eligibility is determined by your reported income.

Finding Out if You Owe Money or Not

In order to determine which set of consequences you could potentially face, you need to know whether or not you will be owing money to the government. You can do this one of 3 ways:

  • Calculate your taxes via government provided forms.
  • Use online software to calculate your taxes.
  • Have a company provide a free estimate.

However, if you are taking the time to fill out the necessary forms to determine whether or not you owe money, you may as well file the taxes. Even if you do owe, delaying the inevitable will only increase the interest on the amount owed.

Even If You Owe Money, You Should File As Soon As Possible

Despite whether or not you can pay the owing amount by the due date, you should file your taxes on time. Luckily, the CRA can work out a payment arrangement so you can make smaller payments over time until your debt is paid.

If you don’t, you are looking at that accruing interest on the unpaid amount beginning immediately after the tax filing deadline.

While ignoring the problem may seem like a good way to make it go away, letting your taxes sit in limbo will only make matters worse down the road – whether you end up paying large interest rates or lose out on GST credits and benefit payments.

Not Sure What to Do?

Contact us today to speak with a dedicated professional who will be more than happy to address your current situation and determine your tax-related needs.

Is There a Penalty for Filing Taxes Late if You Owe Nothing?

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In Canada, there are no fees or penalties if you file your taxes late – as long as you don’t owe anything.

The main consequence of filing late when you owe nothing is a delay in receiving any returns you are owed. The CRA (Canada Revenue Agency) simply holds your refund until you do file. Filing late may also cause delays with spouses and common-law partners in which the calculation of a tax refund depends on information from your return.

Also, if you receive benefit payments, such as the Canada Child Tax Benefit or the Working Income Tax Benefit, your payments may be interrupted since your eligibility is determined by your reported income.

Alternatively, there are serious financial consequences to filing late, or not filing at all, if you owe money on your taxes.

Tax Filing Deadline

Canadian tax returns for any specific year must be filed by April 30th of the next year. The only exception are returns for self-employed individuals, who have until June 15th of the following year.

Late Filing Penalties

If you owe money on your tax return, and file late or not at all, the CRA will charge compound daily interest starting on May 1st on any unpaid amounts. This includes any unpaid amounts from previous years.

The penalty for late filing is 5% on the total amount owing plus 1% for each month the return is late up to 12 months.

For example, if you owe $10 000 and file your taxes 5 months late, the CRA will charge 5% interest on the owing amount plus an additional 5% (1% for each month late). This means you will ultimately owe $11 000 on your taxes.

Tax Payers Relief Provision

Life happens and filing previous tax returns, or paying any taxes owed, may be hindered by unfortunate life situations. The CRA administers legislation called the “Tax Payers Relief Provision” that gives the CRA discretion to:

  • cancel or waive penalties or interest,
  • accept late tax filing,
  • reduce the amount owed.

This provision can apply to taxpayers who have filed late due to extreme circumstances, the inability to pay or financial hardship. These exceptions are granted based on review of individual cases by a CRA agent.

This means that just because you are having a hard time filing or paying your taxes doesn’t mean you will automatically be granted this provision. You must prove your situation to the CRA.

What to do if Your Taxes are Late

Even if you’ve missed the filing deadlines, it is extremely important that you file your taxes anyway! Ignoring the problem does not make it go away and the sooner you file, the less you have to pay in interest penalties.

If you owe on your taxes but cannot pay by the due date, you can work out a payment arrangement with the CRA so that you can make smaller payments over time until your debt and interests are paid.

The CRA will grant a payment arrangement if you can show that you have tried to pay the debt by borrowing money or reducing your expenses. They may require proof of your income, expenses, assets and liabilities.

Should you miss a payment during the payment arrangement, the CRA may revoke the arrangement.

Have questions about filing your taxes late or on time? Contact us for more information!

How To Work With The CRA To File Tax Returns From Previous Years

Computer-chair-and-desk-full-of-filesWhatever the reason may be, sometimes people fail to file their tax returns on time, or in some extreme circumstances, ever! Failure to submit your tax return can have some nasty consequences, including hefty fines and penalties. If you find yourself in this situation know that not all hope is lost; the good news is that there is a way to file tax returns from previous years in Canada. However, how you handle the situation will depend on your circumstances. Read on to learn about what options you have if you need to file tax returns from previous years.

Scenario 1: You Think You Might Owe the CRA Some Money

If you believe that you will owe money to the Canada Revenue Agency (CRA), it’s best to file your late taxes sooner rather than later. As mentioned above, you risk facing sizable penalties and interest charges on any unpaid tax debt. The longer you wait to file, the more you’ll owe. Don’t think just because the CRA hasn’t contacted you that they’ve forgotten you – eventually they will come to collect. So what do you do?

  1. Speak to a professional. A tax accountant can help you through the process of sifting through paperwork and organizing it to submit to the CRA. They can also give you advice on any penalties that you might face.
  2. Ask about the Voluntary Disclosure Program. The CRA has created a program called the Voluntary Disclosure Program which provides Canadians a second chance to correct their taxes or submit any returns that were never filed. There are certain conditions that must apply, but if you qualify for the program, you can get relief from prosecution and certain penalties.

Scenario 2: You Don’t Think You Owe Any Money

Even if you are quite sure that you don’t owe the CRA any money, it’s still important to file your tax returns each year. Failure to do so could mean that you’re missing out on credits and benefits that could end up with the CRA giving you money! Examples of these include GST credits and child benefit payments.

Unless you are 100% sure you don’t owe any money, it’s still worth it to chat with a tax professional before filing to ensure you have a good understanding of your situation. Otherwise, it’s as simple as submitting the tax return late. The CRA allows you to use the same methods for filing that you would use to file your return on time. You can use a tax preparation software, mail in a return prepared by a professional, or complete the CRA’s General Income Tax and Benefit Package and mail it in. If you don’t owe any money, there are no penalties for late filing.

Searching For Tax Help?

Have you let your tax filings slip? Don’t worry! The team at Liu & Associates can help. Give us a call today to schedule an appointment to speak with one of our tax experts.

 

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Consequences Of Not Filing Corporate tax in Alberta

consequences of not filing your corporate tax in alberta

 

 

By not filing your corporate tax return on time (or at all), you’re opening yourself up a number of different penalties from the Canadian Revenue Agency (CRA). Join Liu & Associates as we highlight a few of the penalties below. Keep in mind this list below is by no means exhaustive. For a complete list of corporate tax penalties, visit canada.ca.

 

Failure to File

Corporate tax filing deadlines vary depending on your corporation’s fiscal year end, as well as what type of corporation it is. A corporation has to file their return within six months after their taxation year end, and payment is due either two or three months after taxation year end.

Generally speaking, the penalty for late filing is 5% of the unpaid tax that is due on the filing deadline, plus 1% of the unpaid tax for each month that the return is late, for up to 12 months.

A larger penalty will be charged if the CRA issued a demand to file the return and assessed a failure to file penalty in any of the previous three tax years. This penalty is 10% of the unpaid tax when the return was due, plus 2% of the unpaid tax for each month that the return is late, for up to 20 months.

Instalment Penalty

When the installment interest is more than $1,000, the CRA may charge an installment penalty. The penalty amount is calculated by subtracting the greater of $1,000 and 25% of the installment interest calculated if no installment has been made for the year. The difference is then divided in half to get the final penalty amount.

Large Corporations

A corporation is considered to be a “large corporation” is their total taxable capital employed in Canada at the end of the tax year by it and its related corporations is over $10 million. You can identify yourself as a large corporation on your T2 form.

If a large corporation fails to file their return, a penalty can be charged for each month that the returns are late, for up to 40 months. The penalty is calculated by adding up 0.0005% of the corporation’s taxable capital employed in Canada at the end of the year and 0.25% of the Part VI tax payable by the corporation (before deductions).

False Statement or Omissions

The CRA can charge a penalty if a corporation, either knowingly or due to gross negligence, makes a false statement or omission on their corporate tax return. The penalty for a false statement or omission is the greater of either $100 or 50% of the amount of understated tax.

The Exceptions

It’s good to note that the CRA will sometimes consider waiving penalties or interest if the reason for a late filing or not paying is beyond the taxpayer’s control.

Liu & Associates Can Help

If you need help with your corporate tax return, give the experts at Liu & Associates a call. We will work with you and your company to make sure your corporate tax matters are as smooth and cost-efficient as possible.

What To Expect When Filing A Late Tax Return

 

FilingFiling A Late Tax Return your tax return late should be avoided if possible, because doing so can end up costing you big – especially if it happens year over year! A late tax return can come with interest, penalties and even interest on your penalties! However, if you have missed the April 30 deadline, don’t dismay – Liu & Associates can help! Read on for what you need to know about late tax returns.

What Fees Are Associated with Filing My Taxes Late?

If you owe taxes to the CRA and you fail to meet the April 30 deadline, penalty charges and compound interest will accrue on any unpaid amount. The late-filing penalty is 5% of your 2016 balance owing, plus 1% of your balance owing for each full month your return is late (maximum of 12 months).

If you have already racked up a late-filing penalty in previous years, your new penalty may bump up to 10% of your balance owing, plus 2% of your balance owing for each full month your return is late (to a maximum of 20 months).

Starting May 1, the CRA starts to charge compound daily interest on any unpaid amounts owing for the previous year. Even more, you will start getting charged interest on any penalties you receive starting the day after your return is due.

What If I Don’t Owe Any Tax?

If you don’t owe the government any money, you don’t need to worry about getting hit with a penalty – but the government will hang on to any refund until you file a return.

You’re Not Alone

Liu & Associates can help minimize the stress that is associated with filing a late tax return. Our team will help to create a solution to your late filing. Give us a call to book an appointment today!

Penalties For Late & False Tax Returns

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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.

late-filing penalty

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.

5 Consequences of Late Tax Return

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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 filing a late tax return:

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.

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.

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.

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.

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%.

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!