Advertisement
Canada markets close in 5 hours 58 minutes
  • S&P/TSX

    22,159.48
    +52.40 (+0.24%)
     
  • S&P 500

    5,253.41
    +4.92 (+0.09%)
     
  • DOW

    39,782.58
    +22.50 (+0.06%)
     
  • CAD/USD

    0.7379
    +0.0007 (+0.09%)
     
  • CRUDE OIL

    82.35
    +1.00 (+1.23%)
     
  • Bitcoin CAD

    96,016.79
    +1,165.27 (+1.23%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,229.00
    +16.30 (+0.74%)
     
  • RUSSELL 2000

    2,122.76
    +8.41 (+0.40%)
     
  • 10-Yr Bond

    4.2100
    +0.0140 (+0.33%)
     
  • NASDAQ

    16,406.59
    +7.07 (+0.04%)
     
  • VOLATILITY

    12.97
    +0.19 (+1.49%)
     
  • FTSE

    7,964.40
    +32.42 (+0.41%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6821
    +0.0016 (+0.24%)
     

The (big) dangers of not filing your taxes on time

Tax day, otherwise known as “scramble to punch in those last few numbers” day, falls on a Saturday, meaning Canadians get a two day grace period until Monday May 2, to file their taxes. But take a day too long and you could wind up with a hefty tax bill.

“You definitely should file on time,” says Sam Seidman, a Toronto-based accountant. “You’ve got until Monday to file – but they start ticking the clock from there.”

Late filers will be hit with a penalty of five per cent of their 2015 balance owing and an additional one per cent of the balance owing for each full month the tax return is late up to a maximum of 12 months. Repeat offenders, those who’ve been hit with a late-filing penalty on previous returns for 2012, 2013, or 2014, could get hit with a 10 per cent late fee plus an additional two per cent of the 2015 balance owing for each full month the return is late up to 20 months.

ADVERTISEMENT

“So your tax bill can go up substantially – it’s a pretty big penalty,” he says. “I’ve seen people paying 35 per cent on their taxes owing.”

According to the latest figures from the Canada Revenue Agency, 18 million Canadians, nearly two thirds of the tax filers in 2013, collectively owed more than $185 million in taxes.

“Even if you don’t have the money to pay, filing before that deadline can help you avoid the late penalties,” says Seidman.

In cases like this, the CRA will come up with a payment schedule for the overdue balance that works for the taxpayer. But there will still be interest charges. The CRA, which sets that interest quarterly, will charge five per cent on the overdue balance owing.

Here’s a tip: Don’t lie

False statements or omissions can also get you into trouble.

According to the CRA, you may have to pay a penalty if you “knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your 2015 return.”

The penalty starts at $100 but can go up to 50 per cent of the understated tax and/or “the overstated credits related to the false statement or omission.”

But there can be relief for some late or non-filers in the form of the Voluntary Disclosures Program, says Seidman.

“As long as CRA is not looking for the return, hasn’t demanded it be filed or sent out any correspondence or indicated that they’ve been looking for any money or payment we could actually file the return under the Voluntary Disclosure Program,” says the accountant.

He points out that mistakes happen and under the right circumstances, concessions can be made.

“Maybe they were going through a marriage breakdown and they thought their wife was filing for them, or they had a heart attack and didn’t get to file or maybe they didn’t even think they made enough to pay taxes – there are lots of different reasons,” says Seidman. “If they have a valid reason why they didn’t file that could relieve them of the penalty and sometimes they even waive the interest as well.”