Tips & Advice

Help! I’m late filing my taxes

by Sean Cooper

If you’re running into financial difficulties, ignoring your taxes won’t make the situation better; it will only get worse. If you can’t file your taxes by the midnight May 5 deadline, let the Canada Revenue Agency know as soon as possible. If you’re filing late due to illness or job loss, you may be able to make arrangements to lessen the interest and penalties you’ll face.

Electronic Payments

An easy way to avoid filing late is to pay electronically. Instead of mailing a cheque to the CRA, consider paying online. If you have a computer, you can pay through your bank’s website, the payment service Plastiq, or using the CRA website’s “My Payment” service.

Late Filing Fees

The CRA assesses penalties for filing tax returns late. If you have a balance owing to the CRA and fail to file your tax return by the May 5 deadline, you’ll face costly interest and penalties. The CRA charges a 5-percent penalty on balance owing, plus an additional 1 percent on balance owing for every month a tax return is filed late, up to 12 months.

Instalment Payments

If you’re self-employed or have a large balance owing to the CRA, you may be required to pay your taxes by instalment. These quarterly payments help by spreading out the total due over the course of the following year while you earn income. But be sure to pay these instalments on time or you’ll face costly penalties and interest.

Those who regularly file their tax return late could face an even stiffer late filing penalty. If you filed your tax return late in any of the last three years, you could face a penalty of 10 percent on your balance owing, plus an additional 2 percent on your balance owing for every month your tax return is filed late, up to 20 months.

If you can’t afford to pay your tax bill by May 5, you can still avoid late filing penalties. File your tax return by May 5 and make arrangements with the CRA to pay your balance owing later. If the CRA determines that you cannot pay the tax owing in full, they will work with you to establish a plan to help you pay the taxes.

The Taxpayer Relief Program may be able to get you a waiver on tax interest and penalties if circumstances beyond your control kept you from filing your taxes on time. These circumstances include a civil disturbance (such as a postal strike), financial hardship (lack of what is needed for basics living requirements like food, clothing, shelter, and medical expenses), or a natural or human-made disaster (like a flood or fire). To apply, you must complete and mail in a copy of Form RC4288, Request for Taxpayer Relief — Cancel or Waive Penalties or Interest to your nearest tax office.

When You Can’t Pay Your Taxes

If you’ve made a reasonable effort to pay the CRA, and you’re still not able to pay the full tax bill, you may be able to make a payment arrangement. This is a plan you negotiate with the CRA to pay any outstanding balance. Depending on the circumstances, you may still face interest charges.

About the Author

Sean Cooper is a financial journalist and personal finance expert. His areas of expertise include real estate, mortgages, pensions and retirement. His articles have been featured in major publications, including the Toronto Star, the Globe and Mail, MoneySense and RateSupermarket.ca.