No one likes missing the tax filing deadline. But it is possible to get back on track even if you’re three, five or ten years behind. You still have options.

Missing the Deadline Isn’t The End of the World

At Personal Tax Advisors we always urge our clients to file on time, to avoid penalties and interest. However we recognize that sometimes life gets in the way. Health issues, grief, emotional distress and personal disruption or disaster can make tax filing the least of your concerns. Eventually when the smoke clears you can and should get back on track.

Start by filing returns

Whether or not Canada Revenue Agency (CRA) has started sending you Demand Letters requesting that you file returns, getting those overdue returns filed is the first step to putting things right. If you owe tax, you may be subject to a penalty (more on that later), and there is also interest accruing on amounts you owe. But filing a return can also release tax refunds — in which case there’s no late-filing penalty at all — and/or unlock credits such as the GST/HST credit or the Canada Carbon Rebate (CCR), sometimes going back years if you qualify.

Five (or Six) Reasons To File Your Late Tax Returns

What to do when you receive a Demand to File letter from the CRA

Dealing with late-filing penalties

If you need to file old returns but CRA hasn’t started sending letters yet, you’re in luck. Even if you have amounts owing that would normally trigger late-filing penalties, we can make a submission under the Voluntary Disclosure Program (VDP) to request that CRA waive the late filing penalties. Generally if this is the first time you’ve filed late returns and if CRA has not previously demanded via letter that you file the return, they will waive the penalties and any interest associated with them.

Voluntary Disclosure (VDP) Filing Can Reduce Penalties and Interest

Dealing with the tax bill

A Voluntary Disclosure won’t eliminate the tax bill itself. But there are a number of routes available for reducing your tax bill to something manageable. One is to make an appeal to CRA under the Taxpayer Fairness rules. Whether or not you’re eligible to have your penalties waived via voluntary disclosure, you can request up to half the penalties and interest be waived due to mental, emotional or financial hardship.

If even that is not sufficient, you have the option of working with a trustee to arrange a consumer proposal. Unlike declaring bankruptcy, a consumer proposal doesn’t require that you liquidate any assets. A consumer proposal is a negotiation between CRA and your trustee, to determine a limited-time monthly payment plan that is manageable in your current financial circumstances. Usually these plans amount to far less in total than the original tax bill, and at the end of the payment period the debt is considered completely discharged.

Video: Dealing With Your Tax Bill

Personal Tax Advisors can work with you

We take a compassionate, judgement-free approach to helping Canadians who are years behind on their taxes. We understand the strain you’re under — both the strain that led to falling behind, and the emotional strain that has resulted as the problem has grown, year after year. We know it seems overwhelming. But we can help.

Download our free guide to catching up on your tax filing, or get in touch to set up a free consultation to discuss your options.