Canada's deadline for submitting your tax return is April 30. So, what should you do if you don't think you are going to be able to file your taxes on time? Read this article to find out!
If you don't file your tax return by April 30, any GST/HST refunds or solidarity tax credits you receive may be stopped or delayed. The same is true if you are expecting any Canada child benefit payments or old age security benefit payments. If either you, your spouse or common-law partner were self-employed last year, you have until June 15, to meet the tax-filing deadline. In situations of a balance owing, you will still need to pay it by April 30. The CRA applies daily compound interest to any unpaid amounts from the previous tax year as of May 1. Prescribed interest rates are subject to change every three months.
If you owe a balance and file a late return, be prepared for a late-filing penalty fee. This penalty is equivalent to five percent of your balance due plus one percent of your balance for each full month your return is late, up to a maximum of 12 months. If you also incurred a late-filing penalty in 2014, 2015, or 2016, the CRA may charge you ten percent of your balance owing for 2017. It will also add two percent of your unpaid balance for each full month your return is late, up to a maximum of 20 months. As you can see, it doesn't make sense to avoid filing your return just because you can't pay your balance in full by the CRA deadline. You can ward off late-filing penalties by filing on time, and contact the CRA about setting up a payment plan for your balance owing.
If you are unable to meet your tax obligations due to circumstances outside of your control, you can ask the CRA to cancel or waive certain penalties or interest. The CRA might consider relieving you of your penalties or interest in the following situations:
You can apply for relief from tax penalties up to ten years before the year of your request. For instance, in 2018, you can request a waiver of penalties related to any tax year ending in 2008 or later. For interest on a balance owing for any tax year or fiscal period, the CRA will only consider amounts accrued within the last ten calendar years as of the date of your request. To make such a request, you will need to fill out Form RC4288 Request for Taxpayer Relief - Cancel or Waive Penalties or Interest. Remember, it's always best to file on time. Nevertheless, if you need to apply for relief from penalties and interest, there are things you can do.