September 11, 2018
Filing Back Taxes in Canada
You should file your taxes on time. This is the best way to avoid interest charges, penalties, and additional hassle from the Canada Revenue Agency (CRA). However, for many reasons, people sometimes do not file their taxes when they should. Maybe you forgot or maybe you didn’t realize that you needed to file. Maybe you did not file on purpose. Sometimes, people believe that it’s in their best interest to not file their taxes if they don’t have the money to pay their tax debt. This isn’t true, but it’s a common belief and it happens.
For whatever reason, if you didn’t file your taxes when you should have, and now you’re wondering how far back you can file taxes in Canada, the good news is that it is possible to file prior year returns.
How to File Late Tax Returns in Canada
Wondering how far back you can file taxes in Canada? Looking for information on how to file your tax returns late? We can help. Our team is made up of experienced ex-CRA, accounting, and legal professionals who understand CRA processes and know how to resolve tax situations.
If you want to file previous year returns, there are options available to you. One option is the CRA’s Voluntary Disclosure Program (VDP). This program is designed as a “second chance” to correct prior year returns or to file returns that have not been filed.
In order to file your back taxes through the VDP, certain conditions must apply:
- You must be making a voluntary disclosure
- To qualify for the VDP, you must disclose information to the CRA before it contacts you for the information. This means that, if the CRA has already contacted you about previous year returns, or if the agency has taken compliance actions against you for not filing your taxes, you cannot use the VDP.
- You need to include all relevant information
- You must disclose all undisclosed information to the CRA. This means that if there were several years where you did not file your taxes (or did not file your taxes correctly) you need to submit information on all of these years. You can’t file a return from two years ago under the VDP if you also have an outstanding return from three years ago, for instance. You must also submit returns from that year.
- In addition, must ensure that all of the information you submit through the VDP is 100% complete and accurate to the best of your knowledge.
- A penalty must apply
- The VDP only applies if you owe money on previous returns. If you do not owe money, you should still file previous year taxes, but you do not need to use the Voluntary Disclosure Program to do so.
- The information must be at least a year overdue
- The VDP only applies to returns that are more than a year late. If your return should have been filed in the last year, you cannot submit it using the VDP.
If you are considering applying to the Voluntary Disclosure Program, please contact us today. Our team can help make sure that your application has the greatest chance of acceptance.
If the CRA has already contacted you about filing back taxes in Canada, and therefore the VDP is not an option for you, you should speak to a member of our team right away. The CRA can be very difficult to deal with – especially if you owe money – and you’ll want to have professionals on your side during this process.