We know, life gets hectic, and it can be easy to forget an appointment or deadline here and there, but, it’s best not to forget to file your taxes on time, especially considering that the Canada Revenue Agency (CRA) gives you a whole year to prepare.
Here is why it is important to file your taxes on time, and what happens if you miss the April 30th tax deadline.
Missed the Tax Deadline: But do not owe taxes
If you file after the April 30th Tax Deadline but you do not / will not, owe any taxes to the CRA, then there will not be any late filing penalties charged, or interest to pay on a balance owing (unless you already have a balance owing). The CRA will hold your refund until you actually file your return, and they will also hold off on any refunds or tax credits for other people, such as a spouse or common law partner, where the calculation of the refund is dependent on information from your return. Examples would be the Canada Child Benefit (CCB) or the GST/HST Credit.
Missed the Tax Deadline: Owe taxes
If you owe taxes to the CRA and don’t file your tax return by the deadline, the CRA will charge you a late-filing penalty as well as compound daily interest on the penalty, which begins on May 1st, of the taxation year in question.
If you have amounts owing from previous years, the CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years beginning with penalties and interest.
Your penalties for filing late will be calculated like this:
- 5% of the balance owing as late filing penalty
- 1% of the balance owing as additional penalty for every full month you’re late (up to a maximum of 12 months)
- Interest charged on the above penalty
- Additional compound daily interest on the balance owing based on prescribed rates by the CRA
If you have become a chronic late-filer, and have been assessed a late filing penalty before, then the CRA has the option to double the late filing penalty for each late filing. The monthly penalty for each additional month that you are late also increases, beginning from 1% a month to 2% a month (up to a maximum of 20 months).
Self-employed individuals often have balances owing, since their income tax is not deducted at source like it is for salaried individuals, and that balance must be paid to the CRA by April 30th, even though their deadline to file is June 15th.
Turbo Tax Tip:
Don’t get stuck with late filing penalties and interest charges this year. Get your taxes done before midnight on April 30th, with TurboTax, the most accurate and easy way to file your return.
Owe Money to the CRA?
TurboTax has recently partnered with PaySimply to provide Canadians with a variety of options to pay the CRA. There is no account set-up required – it’s available in English or French – and using this safe and secure option, you can choose to use your credit card, e-Transfer, PayPal, cash or debit. It’s your choice.