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Each year, Canadians are required to file their Income Tax and Benefit return and, as a result, receive their Notice of Assessment shortly after, which will help you in applying for certain government programs if and when needed. While some people will be receiving a refund, others will be faced with a balance owing to the Canada Revenue Agency. Most Canadians file their income tax returns and pay their balance, if any, on time or at least try to; however, there are a number of individuals that do not file their tax returns or are unable to pay the balance that they owe.  Regardless of your reasons, if you are in the position that you have not yet filed your tax return, it is strongly recommended that you do so as soon as possible. The non-filling or non-paying of taxes can lead to harsh penalties and interest.

 

We know it's never easy filing your taxes knowing you owe the CRA money. Keep in mind though, there is a lot of advantages you miss out on if you do not file on time. I will list some of those reasons below.

 

You Can Avoid Late-Filing Penalties and Interest

 

  • The biggest benefit of filing you income tax return on time is avoiding late-filing penalties. If you have an amount owing as a result of filing your tax return and have filed even one day after the deadline, you will be faced with penalties and interest. The CRA imposes a late-filing penalty of 5% of your balance owing plus 1% for every month that your return is late, up to a maximum of 12 months
     

  • Along with late-filing penalties, the Canada Revenue Agency also charges interest on any taxes owed starting the day after payments are due. The interest imposed on these amounts owing is compounded daily.

 

Additional Reasons to File your Tax Return

 

  • If you do not file your tax returns on time you may be missing out on many helpful aids offered by the government. Below outlines a list of additional benefits to filling your tax return
     

  • You will collect any refund owed to you.

  • You will be asses for your eligibility for certain rebates or programs. Your eligibility to receive many of these benefits and credits is based on your previous year's income bracket. Common benefits generated from filing your tax return include quarterly GST/HST credits, Child Tax Credits and Benefits, Provincial Medical Premium Assistance, etc. Please note that not filing your taxes can delay receiving such benefits.

  • You can claim tax credits. (Provincial, Education and Disability Tax Credits, Working Income Tax Benefit, etc.)

  • By filing your Income Tax and Benefit Return, you can create RRSP contribution room that you can use now or carry forward to use when your income increases.
     

If it turns out that you owe money to the CRA as a result of filing your Income Tax and Benefit return, there are many options about how this can be dealt with:

 

  • You have the option to pay the CRA the full amount owing or contact them to set up a payment plan to pay them in full.

  • You can obtain a bank loan to pay the CRA in full.

  • I do believe you can even ask your employer to garnish a specific amount per cheque to give to the CRA towards your debt.

  • If you are in a situation where you are unable to pay the CRA in full, you may wish to file a Consumer Proposal which will stop any collection action and may allow you to offer the CRA less than the full amount.

 

Again, if you have not yet filed your Income Tax & Benefit return it is a good idea to do so as soon as possible and not to delay it any more than you already have. Deadline is April 30th, 2017. Come on down and get those taxes done!


 

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