Late Filing Income Tax Return
Late Filing Income Tax Return
Being late to file income tax can quickly become costly, especially if there is an outstanding tax owing payment to be made to the Canada Revenue Agency. If you’ve stumbled across this article while searching about filing your late taxes, or owing money to the CRA, we suggest that you contact us right away so that our professional accountants can help you avoid further financial penalties!
Late filing income taxes comes with a financial penalty; 5% of the balance owing for the tax year, plus 1% of the balance owing for each full month the return is late. This penalty is applied all year, and hits the maximum penalty after 12 months. In the case of repeated failures to report tax returns in the previous three (3) years, the CRA may charge an increased penalty of 10% of the balance owing for the tax year, plus 2% of the balance owing for each full month the return is late to a maximum of 20 months.
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Interest on any unpaid balance owing can also be applied and will be charged daily interest, usually starting on the first of May. It’s also important to note that this interest can also be applied to any balance owing if the CRA reassess a tax return to find an amount outstanding; this is also another reason to ensure your income tax returns are completed by a professional.
In the case that a person has delayed filing their taxes because of not being able to afford the amount outstanding in taxes due, the CRA can work with that individual to make a fair payment plan, or in some cases even waive penalties or interest. It is important for the individual to still file their income tax return, regardless of their current financial situation. The CRA will need full disclosure accompanied by evidence of income, expenses, assets and other liabilities, which is another reason to ensure you keep receipts and store them properly.
In the case that an individual does not cooperate with the CRA, there are serious financial and legal consequences to follow. The CRA may:
- Automatically have other federal government payments rerouted to the CRA for any amounts owed.
- Issue a garnishment to intercept money from an employer, bank, or other income sources.
- Certify the debt in the Federal Court of Canada, making the debt a matter of public record with the same effect as a court judgement.
- Seize personal assets and have them sold by a court enforcement officer, while being liable for any charges or costs which are incurred through the sale of the items; being liable for any amount that still remains after the proceeds of the sale have been applied.
- Hold a spouse, business partner, or related corporation jointly responsible for the debt owed.
Make no mistake, failing to file your income taxes, or having an outstanding amount payable to the CRA is no joke. It is important that all Canadians file their income taxes on time, accurately, and truthfully. Having a professional accountant on your side will make the entire experience much more pleasant; contact one of our professionals today to learn more.