The deadline for filing your personal income tax is April 30th, unless you are self-employed – and even if you do run your own business, you might as well file your personal income tax by April 30th as you have to pay any tax balance owing on or before that date anyhow.
The most common reason for not filing income tax returns on time is plain old procrastination; people just don’t get around to it. But come on! TurboTax makes it so quick and easy to do and file your tax return that that excuse is a real non-starter.
Besides, there are good reasons to make sure that you don’t miss the income tax deadline and get your tax return in on time.
For one thing, if you don’t, you’ll wake up to find your home surrounded by a team of Canada Revenue Agency agents, all equipped with portable payment devices, screaming “Pay now! Pay now!”
Here are three real reasons to file on time:
1) Your tax-related payments will be delayed.
Your net income is used as a factor in determining your eligibility for monthly benefit payments such as Canada child tax benefit payments (including those from certain related provincial or territorial programs), old age security benefit payments, and GST/HST credits. So if your income tax return, which shows your net income for 2012, isn’t filed on time, your expected payments won’t arrive on time either.
2) You will be charged late-filing penalties.
If you don’t file your 2012 tax return on time and owe tax, you will be charged a late-filing penalty of five percent of your balance owing plus one percent of your balance owing for each month your tax return is late for a maximum of 12 months.
It gets worse if you’re a repeat offender.
If the Canada Revenue Agency (CRA) also charged you a late-filing penalty on your return for 2009, 2010 or 2011, you will be charged 10 percent of your balance owing plus two percent of your balance owing for each month your tax return is late for a maximum of 20 months.
3) You will be charged interest.
The Canada Revenue Agency will start charging you compound daily interest on May 1st, 2013, the day after your tax return was due, on any unpaid amounts owing for 2012 as well as charging you interest on any penalties they have assessed.
And if you owe taxes or penalties from previous years, the Canada Revenue Agency will continue to charge compound daily interest on what you owe and take whatever payments you make and apply them to those old outstanding debts first.
How much interest you’re charged depends on what the Canada Revenue Agency’s current prescribed interest rates are.
So there you have it; three powerful financial motivations to get your income tax done and filed on time. Even if you think you will have a balance owing and don’t know if you’ll be able to pay it all off by the April 30th tax filing deadline, getting your return filed on time is the smart thing to do.