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How to Avoid Penalties for Filing Your Canadian Taxes Late
It’s important for Canadians to file their taxes on time in order not to attract the usually high penalties and interest rates attached to unpaid taxes. The Canada Revenue Agency is very particular about deadlines, and missing these deadlines may lead to financial implications that compound over time. It is equally important to know how to avoid the penalties for late filing as this will help one save time, stress, and cash. In this article, we will present important steps, deadlines, and measures to help you meet CRA’s taxation requirements.
Learn about the Key Deadlines for Filing Taxes in Canada
The tax filing deadline for most people in Canada falls on April 30 in every calendar year. However, if you are self-employed, you have until June 15 to file your return. Remember, any taxes owed remain due April 30, so filing after this time is likely to attract interest charges on the unpaid balance amounts.
In order not to end up paying for penalties, remember the set deadlines and begin gathering your tax documents well in advance. In some cases, it is best to create reminders or, better yet, use tax software to stay on track. April 30 or June 15 would be considered the closing date, but if it falls on a weekend or a holiday, then the closing date is the next business day.
Consequences of Filing Late
In many cases, this will attract penalties, which you will have to pay if you fail to file your taxes by a certain date. There is also an interest charge of 5% of the balance owing, together with an additional 1% interest charge for each full month that the return is filed late to a maximum of 12 months. If you filed your return late the previous year, the penalty could go up to 10% of the amount owing and an additional 2% per month.
Use CRA’s Taxpayer Relief Provisions
If you have credible reasons for filing your tax return late, then you could be eligible for the CRA Taxpayer Relief Provisions. This program is intended for persons who go through a calamity, disease, disaster, or other circumstances beyond their control that might make them miss the deadline set for filing.
To claim this relief, you have to fill out an application form RC4288, explaining the causes of the delay and accompanying it with evidence. The CRA will look into your request, and where you have met the criteria in the application, the CRA may waive the penalties and interest accompanying the account.
Learn More About Free Tax Help Programs
The CRA provides several free tax help that can be accessed to help those with low-income or simple tax situations. The Community Volunteer Income Tax Program (CVITP) enables eligible volunteers to assist you in filing your taxes for free. These programs are often provided at the community, libraries, or other publicly accessible facilities, making them easily accessible to individuals in need of help.
This can be particularly helpful to the first timers or the people who may feel very challenged going through the process of filing taxes.
Develop a Tax Payment Plan with the CRA
If a taxpayer is not able to make tax payments in full, the CRA allows payment for arrangement plans to avoid incurring more penalties. By contacting CRA and discussing a payment arrangement, you can avoid penalties while paying the owed amount gradually. The CRA requests that you contact them early enough if you expect to have a hard time paying the balance.
Final Thoughts: Filing Your Taxes Early Will Save You Money
Staying organized helps you remember important dates in relation to taxes so that you don’t attract late penalties when you have prepared your tax return. Additionally, the fact is that although many people cannot afford to pay their taxes in full, filing on time and negotiating on when to pay the rest reduces the amount to be paid.
Making arrangements to ensure compliance with the key dates and preparing and submitting your tax return well in advance will help you avoid late penalties. Additionally, regardless of your ability to fully pay your taxes on time, negotiating on when to pay the rest reduces the amount of financial burden to be paid. It’s important to note that the CRA has a number of solutions, including taxpayer relief provisions, free tax help programs, and payment arrangements to assist taxpayers who are facing payment difficulties.
If you miss the deadline or are afraid to face penalties, it does not mean that nothing can be done. To avoid additional penalties, it is advisable to file your taxes as early as possible and contact the CRA to avoid further fines.