We have less than 2 weeks before the deadline to file our Personal Income Tax Returns. As tax professionals, we cannot stress enough the importance of filing your tax returns on time and, if you owe the CRA, pay on time as well.
So why is it important to file and pay on time? First of all, if you file your tax on time, your benefits and credit payments such as GST/HST credit and the Canada Child Tax Benefit, will be paid to you on time and will not be delayed. Secondly, if you owe tax and don’t file your tax return on time, the CRA will charge you a late-filing penalty. The penalty is 5% of the balance you owe plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. The penalty is higher if you are a repeat late filer.
It is important to note that even if you can’t pay your taxes right away, you should still file your tax return on time and pay what you can. Filing on time means you will be able to avoid the late-filing penalty. After you file your return, you will be sent a Notice of Assessment from the CRA which will show the amount you still owe. The Notice will also inform you of the payment deadline. If you do not pay before or on the payment deadline, interest will accrue on the balance at the prescribed rate of interest, compounded daily.
If, for some reason, you are filing a late tax return, you can send a printed or manually prepared tax return to the CRA. Please take note that the TELEFILE service will be available until June 30th and that EFILE and NetFile are available until September 30th for tax returns for the prior year.