We are currently still accepting new clients with slip-only returns for the April 30th deadline and small business owners for the June 15th deadline!
Have you been avoiding filing your taxes? You are not alone. It’s quite common to feel anxiety around filing taxes and attempt to avoid the issue all together. At Coastal Tax, we make having your taxes professionally filed as easy as possible! You don’t even have to leave the house!
Q: Are there penalties for filing late?
A: Yes, the CRA will charge you interest on any tax you owe as well as a late filing penalty if you have missed the deadline of April 30, 2018 or June 15, 2018 if you or your spouse is self-employed. Unfortunately, you cannot avoid this forever and eventually it will catch up with you. Waiting longer is only hurting your own wallet because the interest on tax owing is compounded daily.
If you have a balance owing for 2017, the CRA will charge compound daily interest starting May 1, 2018, on any unpaid amounts owing for 2017. In addition, the CRA will charge you interest on the late filing penalties starting the day after your return is due. The rate of interest is updated every three months and the current interest rate is 5%.
The late-filing penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. If this is your second offence, the rate increases to 10%.
My advice is: Even if you cannot pay your balance owing by April 30, you can at least avoid the late-filing penalty by filing your return on time.
Q: I have not been able to deal with my taxes because of a death in the family/serious illness/extreme financial hardship. Will I really have to pay all the penalties and interest if I owe?
A: Under certain circumstances, interest on unpaid taxes may be waived or cancelled. See Taxpayer relief provisions for more info. You will need to apply using form RC4288 Request for Taxpayer Relief. Coastal Tax can help you fill in this form correctly.
Q: Yikes, well that all sounds depressing! Is there any situation where I DON’T have to file taxes?
If you have no taxable income, i.e. you did not work or earn income of any kind during the year, then you are not required to file a tax return. If you have been working but you have never received a letter from the CRA demanding that you file a T1 return, you may be thinking… Lucky me! I am totally slipping under the radar here.
What is probably happening is that you would actually be owed tax refunds and the CRA hasn’t come after you because they owe you money. If you are getting a refund, there will be no penalties or interest because the percentage is only charged on tax owing. If you are behind on a few years, Coastal Tax can help you get caught up and make sure you are getting everything back that you are owed!
Q: My spouse was working, but I didn’t have any income this year so do I have to file?
There are actually some good benefits in reporting your nil income! If you are receiving Canada Child Tax Benefits (CCTB) then BOTH spouses must file tax returns on time every year in order to keep receiving these payments. Also, did you know that the Child Tax Benefit is non-taxable income? You will not receive a slip for this like you did in 2016.
Another benefit is the GST credit. You do not have to apply for this credit, you are automatically registered for it based on your 2017 family income when you file your taxes. This represents up to $544 that you could be receiving!
Knowledge is power, friends!
About the Author:
Alicia Loewen is a certified Platinum QuickBooks Online ProAdvisor and the owner of Coastal Tax and Accounting Services on Vancouver Island, BC. Coastal Tax is a modern accounting firm and offers all services remotely using online and paperless software to make bookkeeping and tax preparation as painless as possible. Contact Alicia to set up a free consultation.