The CRA says that nearly one in three Canadians file their taxes late. That’s a lot of people cutting it close to the deadline. And, let’s be honest, it’s not always because they’re procrastinators. Sometimes life gets in the way. You might have had a baby, gotten married or divorced, or suffer a death in the family. Maybe you move, change jobs, or had some other major life event that made it tough to get your taxes done on time.
Whatever the reason, if you’re one of the millions of Canadians who file a late tax return accountant, don’t beat yourself up. You’re not a bad person. You’re just human.
But, that doesn’t mean there aren’t consequences for filing late. If you owe $1,000 and file your return one month late, you’d owe a $50 penalty. Not fun.
There’s also a late payment penalty of around 0.5% of your unpaid taxes for each month (or partial month) that you have delay your payment, up to a maximum of 25%. So, if you owe $1,000 and didn’t pay until two months after the deadline, you’d owe a $10 penalty.
If you’re thinking, “I’ll just file an extension!” think again. An extension to file does not imply that you have an extension to pay. You’ll still owe penalties and interest on any unpaid taxes.
There’s some good news – the Canada Revenue Agency is usually pretty understanding. If you have a legitimate reason for filing late, they may waive the late filing penalty. And, if you can’t pay your taxes in full, they may be willing to work out a payment plan with you.
So, if you find yourself to be in the position of filing a late return, don’t panic. Take a deep breath, gather up your documents, and get it done. It’s not the end of the world.
Consequences of Late Tax Return
If you can’t pay what you owe by that date, you can file for an extension. This will give you until October to file your return.
If you don’t file your taxes by the deadline, you may be charge a late-filing penalty. The penalty is 5% of the unpaid taxes for each month or part of a month that the return is late. The maximum penalty is 25%. More than 60 days late once the due date passes, you may have to pay a minimum late-filing penalty of $205 or 100% of the unpaid tax, whichever is less.
In addition to the late-filing penalty, you will also be charge interest on the unpaid taxes. The interest rate is currently 4%, and it is compound daily.
If you don’t pay your taxes on time, the CRA may also file a Notice of Federal Tax Lien. This is a public record, and it could damage your credit rating. The CRA may also issue a levy, which allows them to seize your assets, such as your bank account or your wages.
If you’re facing financial difficulties and can’t pay your taxes, you should contact the CRA to discuss your options. They may be able to assist you and work out a payment plan with you.