As we approach one of the biggest tax filing days of the year* and tension rises, it’s time to remind everyone of one important thing:
Even if you can’t afford your tax bill, file your tax return on time
Bonaventure Personal Tax Advisors:
Next Level Tax Preparation
Next Level Tax Preparation means you can speak to a tax expert about your return anytime in the year.
We are a year-round tax preparation office with knowledgeable tax specialists available to speak with you whenever you’d like. Whether you have a question about a return we filed previously, or to get a tax perspective on an important transaction or life event, members of the Bonaventure family can always set up a one-on-one consultation with a tax advisor.
When it’s time to get serious about your taxes and your life, it’s time to move up to Bonaventure.
Many Canadians understandably equate filing a return with paying their bill. The fact is, the filing and paying don’t have to go together and never did. You can always file your tax return before the deadline even if you’re not ready to pay — and you should.
CRA agents care more about paperwork than money
It’s counterintuitive but true: CRA agents are less interested in actual payment than filing deadlines.
The Canada Revenue Agency (CRA) is run by bureaucrats – which, trust me, is what you want when someone’s job is determining your income tax owing and managing your account. You want someone who’s obsessed with records and tracking and proper procedure working the tax desk.
The flip side of that bureaucratic coin is that CRA agents positively break out in hives when they don’t receive the paperwork they need to get their job done. Hence they’re far more punitive when you owe them paperwork than when you just owe them money.
You have always had the right to file your taxes one day, and pay at some other date.
If you pay your taxes after the payment ‘deadline,’ which is always April 30* for all Canadian individuals regardless of their filing deadline, CRA can charge interest at their current annual rate (find the current rate here).
Self-employed returns have an extended filing deadline
What if I need to file old returns?
Filing on time saves you money
But if you file your taxes after the filing deadline you’ll immediately pay a 5% penalty for the first day you’re late, plus another 1% for every additional month you’re late, up to 12 months. If you’ve made a habit of filing late (CRA considers you to be a habitual late filer when you’ve filed two out of any three consecutive returns late), all the penalties double. And the late-payment interest is then charged on top of both the tax and the penalty. Why pay the extra if you don’t have to?
The moral of the story is that when you’re dealing with bureaucrats, focus on the paperwork first and money second. It’s better to owe tax, then to owe a return.
* The filing deadline is June 15 for self-employed people and their spouses, and April 30 for everyone else; the payment deadline is April 30 for everyone.
Booking an appointment:
Contact us to set up an appointment. Let us know which tax year(s) you’re filing, whether you have self-employment income, and whether you’re a new or returning client and we’ll get you set up ASAP.
This is the best financial advice that you can get at the moment. You should always file even if you are having trouble paying something. If you don’t file on time, you’ll get in a lot of trouble and then you can’t get out.