Tax season is upon us in Canada, with returns due shortly. Across the country, the scramble has begun for people looking to get everything in on time. Getting your T4s, details on your investments, and all financial information from your past year is a complicated process, and there are likely times when people wonder why they even have to at all. While tax returns are exhausting, it is crucial to get everything done as promptly as possible before the April 30th deadline.
It is so important to get taxes done as quickly as possible because of how harsh penalties can be if taxes aren’t paid in time. The Canada Revenue Agency, or CRA, is thorough, and taxes cannot be avoided. Getting your tax returns done on time ensures that you stay CRA-compliant and avoid punishment. But what happens if you don’t?
People across the country fail to pay their taxes and submit their returns regularly, and the risks of this are severe. The CRA has harsh penalties for those who miss payments, and it is best to be proactive to avoid fines and even prison. Let’s look at exactly what happens when you miss your tax payments.
Penalties for Late Returns
If you owe money in taxes, it can be a nerve-wracking experience because the risk of falling behind payments is extensive. The CRA has penalties for different situations, and they can pile up. If you have a balance owed from the previous tax year and fail to pay that balance by the due date, which is April 30th, the CRA will start to charge you compound daily interest. That means the amount you owe will increase daily.
If you file your tax returns late, you will also be charged interest. There is a penalty for submitting your taxes after the deadline: 5% of the balance you owe and an additional 1% for each month you neglect to file for up to a year. Regardless of the amount you owe, taking care of this problem before it can even arise is the best practice.
If this is a problem you’ve dealt with in the past, and you miss the deadline again this year, the problem will be much worse. If the CRA charged you a late-filing penalty in any of the three previous years, the penalty for filing your 2021 taxes late would be 10% of the balance you owe, with an additional 2% increase for each month after the due date you neglect to file, up to 20 months.
If you outright evade taxes, the penalty can be much more severe. If a taxpayer is convicted of tax evasion, they must repay the full amount of taxes owed plus interest. There are also civil penalties, and tax evaders can be sent to jail for up to five years, depending on the seriousness of the crimes. The CRA is a powerful organization, and you don’t want to run the risk of running afoul of its rules.
Risks of Missing Tax Payments
The risks of missing tax payments are especially dramatic because the situation will consistently worsen. The more you fall behind on your payments, the steeper the fines become. At first, the penalty isn’t bad, but the longer you wait, or the more times you are negligent with your taxes, the more you owe.
Even if you can’t pay the balance you owe the CRA, you should still file your taxes on time. This will help you avoid the late-filing penalty and keep you from falling behind even worse. Avoiding penalties should be high on your list of priorities, even if tax season is a lot of work.
Taxes are confusing. Whether you are an individual, a business owner, or a real estate investor, there is so much to know about taxes. One of the reasons many people fall behind on their tax payments is that they don’t know where to begin. This is nothing to be ashamed about. However, you need to take action to avoid getting into a hole with the CRA that will be difficult to get out of. Connect with a team of professional accountants, like Fiscal Expert: a team that can help you stay out of tax trouble.
Fiscal Expert is a group of highly experienced professional accountants dedicated to providing clients with comprehensive, personalized services. Many problems most people have with taxes can be addressed by adding clarity to the situation, and Fiscal Expert does just that. Fiscal Expert’s tax professionals offer affordable preparation and submission of tax returns, helping you get everything ready and in on time.
If you have fallen behind on your tax payments and owe the CRA money, professional accountants can help you define the best path forward. If you haven’t fallen behind but are concerned about payments, Fiscal Expert can explain what you need to do and how you can do it. Avoid stress and confusion by working with the experts.
Tax season is a time when many are running around trying to get their affairs in order. If you haven’t been proactive throughout the year about your returns, you will likely have a lot to sort out. While it can be a significant amount of work and cause stress, the extensive penalties levied by the CRA for those who miss payments or file late returns are not something you want to experience. The more you procrastinate on taxes, the worse the situation gets.
That is why the solution is to stay on top of your taxes with the help of Fiscal Expert. Fiscal Expert offers professional, customized advice on taxation rules and regulations by a talented team devoted to providing top-notch customer service. Fiscal Expert offers high-quality advice that gives you clarity and understanding of your situation and can do the hands-on work that ensures taxes are filed on time.
Missing tax payments or not filing by the deadline is a mistake that can have serious consequences. With Fiscal Expert, you can receive professional assistance that helps you avoid plunging yourself into long-term tax trouble.