Late Returns & Unfiled Taxes
Late Returns & Unfiled Taxes – it happens!
Something happened – maybe it was an unexpected life event like the death of a family member, or maybe it was trying to avoid a huge bill and sometimes you’re just so busy you have no time to file. Now you’re stuck with late returns or unfiled tax returns. What can you do?
Have you received a Request to File from the CRA or possibly even a Demand to File? CRA is getting serious about wanting to see a return. They’ve looked at your income trend and decided that you are likely to pay tax. If you do not respond to CRA’s demands, they will assess your return based on their best guess – this is not going to be a good outcome for you. Especially if you’re self employed.
CRA has the power to collect interest and penalties on late returns & unfiled taxes.
Interest on taxes owing accrues from the due date of the return at the government prescribed rate (under 5%). Penalties for not filing start at 5% of the amount owing and can climb with repeat late returns up to 50%. If you don’t think you owe anything, there won’t be any penalties.
It’s time to take action. The first step is to make a plan to get the late returns filed. What you assume is a huge job, usually turns out to be only a few hours. Start by assembling your T slips and income receipts. Then start working on your deductions and expenses. That $10 donation receipt is only worth $1.50 so don’t kill yourself with minutia. Most clients come in wracked with fear but leave relieved knowing it’s not nearly as bad as they imagined.
What about missing paperwork? In the case of employer slips such as T4s and some T4as we can download copies from the CRA’s website. If you’ve got missing T3s and T5s, our office can work with you and CRA to get those figures too.
Voluntary Disclosure Program – Canada Revenue Agency has a program called the Voluntary Disclosure Program whereby taxpayers can elect to file tax returns and show unreported income without penalties and interest provided you are voluntarily coming forward. A short meeting with our staff can tell you whether you qualify for this program and how we can get you registered. This program is the one the tax lawyers use but it doesn’t require a $10,000 lawyer; any taxpayer can take advantage of it.
The final step is finding a trusted accounting partner who will remind you of upcoming deadlines, help you plan for tax payments and keep you on track. We say file your taxes on time even if you owe the government money – the liability or tax owing is real whether you file or not. That means interest accrues whether you file or not. The only question is whether you’ll pay a penalty or not.
Let’s have a coffee and see how we can help you get back on track.
You can reach us by calling (905)-831-6383 or use our confidential Contact Form or visit us!