Most Canadians who are required to file an annual return, by whatever method, must do so on or before April 30. A filing extension is, however, provided for self-employed Canadians and their spouses, who are required to file on or before June 15, 2013. As that date falls on a Saturday this year, the actual filing deadline will be extended to Monday June 17, 2013. It’s important to note, however, the payment deadline for 2012 income taxes is still April 30, 2012, even for those who are not required to file until June 15.
By the end of that day on April 30, all income taxes owed for the 2012 tax year by any individual Canadian must be paid in full. Where payment is not made, or a payment made is less that the amount owed, interest will be levied on any amount outstanding beginning on May 1, 2013. Interest charged by the CRA on outstanding tax amounts is higher than commercial rates—the current interest rate levied (from April 1 to June 30) is 5%. As well, where interest is payable, such interest is compounded daily, meaning that each day, interest is charged on interest which was levied the day before.
It’s not uncommon for those who sit down to prepare a tax return for the year to discover that there is, unexpectedly, an amount owing, and that they don’t have the cash flow or savings needed to pay that amount by April 30. Many such taxpayers then put off filing, reasoning, perhaps, that if they can’t pay their taxes, there’s no point in filing. That is, however, the wrong conclusion. Where a return is not filed on time, an immediate late filing penalty equal to 5% of taxes owed is imposed, in addition to any interest charges levied. While it’s not possible to avoid those interest charges, filing the return on time will at least ensure that there’s no late filing penalty imposed.
Where a return must be filed without payment of taxes owed, or with payment of less than the full amount, the best course of action is to include a letter with the return explaining that the amount owed cannot be paid on filing and indicating when payment might be made. It won't change the interest or penalties but may help slow collection processes.
At Cope, Barrett & co, we are here to help. There are times that very extenuating circumstances arise and at that point CRA will consider a request for fairness to reduce penalties and interest. We have been successful a number of times when making this request, but I do stress the circumstances were completely out of the ordinary and quite drastic. Call, email or visit today to see if we can help! jfbarrett@copebarrett.ca www.copebarrett.ca
No comments:
Post a Comment