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CRA Interest and Penalties Corporate Tax Debt

Wondering how CRA Interest and Penalties Corporate Accounts work and what can be done about it to ensure your in good standing with the CRA? Even though CRA interest and penalties corporate tax debts can be very substantial, relief is possible if done correctly.

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How CRA Interest and Penalties Corporate Accounts Work


Most individuals and corporations in Canada are required to file taxes to the Canada Revenue Agency (CRA) and pay tax debt on time. Generally, most Canadian corporations pay their taxes in installments. If you do not file and pay taxes when they’re due, you will be charged penalties and interest. The CRA interest and penalties corporate entities pay in these situations depends on several factors.

If you have an unpaid balance, you will be charged compound daily interest on the amount owing and you will also be charged interest on any penalties. The CRA can change the interest rate it charges every three months. To find out the current rate, check the CRA website. Interest is charged starting on the day the tax debt is due, unless the amount is paid in full.


Details on the CRA Interest and Penalties Corporate Organizations Could be Faced With


If corporations fail to file returns, or they do not file tax returns on time, a penalty applies. In most cases, this penalty amounts to 5% of the unpaid tax amount that is due on the filing deadline, plus 1% for each complete month that the return is late, up to a maximum of 12 months. However, if the company was charged a penalty in any of the three previous tax years, a larger penalty could apply. In these situations, the penalty could be 10% of the unpaid tax, plus 2% for each complete month that the return is late, up to a maximum of 20 months. This amount can be quite substantial depending on the situation.

The CRA may also charge an installment penalty in situations where tax installments were not paid on time and where interest is more than $1000. This penalty is calculated by subtracting from the instalment interest either $1,000 or 25% of the instalment interest calculated if no instalment payment had been made for the year, whichever is greater. The penalty charged will be equal to one-half of the difference of this calculation.

These penalties and interest charges can obviously get quite large, which is why organizations should aim to file taxes on time and pay tax debts and installment payments when they are due. It’s important to note that large corporations can be charged additional penalties if they fail to file appropriate returns as required by law.

The CRA can also charge penalties in situations where a corporation does not correctly report income as well as in circumstances where a company makes false statements or omissions on tax returns, either knowingly or through gross negligence.


Dealing with CRA Interest and Penalties Corporate Accounts


If a corporation is charged interest and penalties, these large costs can be difficult for the company to afford. Working with an experienced tax professional can help. The team at Farber Tax Solutions has the knowledge needed to successfully resolve tax issues, as well as a proven track record of successfully communicating and negotiating with the CRA.

Our team knows CRA processes inside and out and can successfully navigate these complex processes. While the CRA will never take less than is owed to it, it may consider waiving interest or penalties in certain situations. The agency may also agree to a payment plan that will make it easier to pay off tax debt. By working with the Farber team, you give your organization the best chance of success. Contact our team for more information.

Farber Tax Solutions Helps You at Every Step of the Way including:

  • 1| Organizing: We analyze all documents and communication, to fight the CRA on your behalf
  • 2| Audits: We assist you with audits and ensure proper conduct by tax authorities
  • 3| Appeals: We can prepare a Notice of Objection, clarifying your standing with the CRA
  • 4| Litigation: We represent you at all levels of court