Tax Time: Will You Owe After the 2015 Income Tax Deadline?

All Canadians who are employees have to submit their 2014 taxes by the April 30, 2015 income tax deadline. If you have a balance owing and do not pay at the tax deadline you will incur interest charges. If you file late with a balance owing, you will also be assessed a late filing penalty. 

Self-employed individuals with balances owing are required to make quarterly installment payments during the year. These installments are based upon one of three things:

• Reported income in the prior year,
• Estimated income for the current year, or
• The installment payment schedule sent to you by Canada Revenue Agency (CRA).

Not paying these installment amounts in full may attract penalties and interest.  

If you believe this applies to you, you are not alone. Tens of thousands of Canadians who do not have all their tax affairs in order and owe money they cannot quite pay the way the government sets out find themselves struggling each and every year.

Tax payers often do not file their personal income taxes because they have not filed for a previous year or years. You lost your T4 slips or owed money and planned to file when you could pay, hoping that by staying quiet you could keep CRA off your back? It does not matter to CRA why you missed the tax deadline – they simply apply an ever higher penalty rate to each subsequently missed tax deadline: following your first late filed tax return, you could face penalties amounting to 50% of your balance owing for any other late filing.  

It is important to dispel up a few urban myths regarding the 2015 income tax deadline:

• It IS an offence not to file your tax returns.
• It IS NOT an offence to owe taxes – even if you cannot pay them right away.
• CRA does not have “nice” and “not nice” collectors. They are all trained to use every tool that CRA has to collect from you as fast as possible. Being “nice” and asking you to fill in a form so they can approve a repayment plan is often a trap - one which can be avoided if you have experience with how and when to present the information.
• If the taxes owing need only two or three months to pay off, CRA will work with you. But if you will need longer you probably will do better if a tax specialist company experienced in negotiating reasonable payment terms with CRA handles the matter for you. A deal you cannot afford to maintain is no deal at all - but getting CRA to understand that takes knowledge regarding what CRA needs to see to grant you more reasonable terms.
• There are programs available at CRA to reduce or even eliminate interest and penalties due to unfiled tax years. When it comes to these programs, CRA is demanding with regard to access to these programs and a specialist tax services company makes sense when the amount at risk is significant to you.

Look at the penalties for late filing on CRA’s website.

If you owe taxes or are simply behind in filing your returns, make this the year you clear up the mess, stop looking over your shoulder (waiting for CRA to send their auditors and collectors after you) and where necessary get representation from a competent tax service company with expertise in resolving these issues.

Tax Solutions Canada is that company. We can help you deal with late filing penalties and interest and help you navigate the complex waters. Call us today at 1-888-868-1400.