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Can't Pay Your Taxes by CRA Tax-Filing Deadline?

Rebecca Rustin
Time running out to file taxes

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!

What if you miss the tax-filing deadline?

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.

Late-filing penalties

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.

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How do I apply for tax relief from penalties?

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:

  • Extraordinary circumstances. These could include natural or human-made disasters such as fires or floods, civil disturbances such as a postal strike, a serious illness or accident, and serious emotional or mental distress, such as the death of an immediate family member
  • Actions of the Canada Revenue Agency (CRA). These could include processing delays, errors in CRA material that contained misinformation that caused you to miss a payment or file a late return, information delays that made you unable to meet your tax obligations on time, and undue delays in resolving an objection, appeal, or in completing an audit
  • Inability to pay or financial hardship. Examples include loss of employment or excessive interest charges that make up a significant portion of your payments. If paying interest penalties impedes your ability to afford food, medical help, transportation, or shelter, the CRA can waive certain charges
  • Other circumstances. The CRA reserves the right to grant relief to taxpayers whose circumstances do not meet the criteria above.

It's not all bad news

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.

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