Late Tax Filing Penalties
Everything you need to know about the penalty for filing taxes late and how to resolve your tax problem.
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A Guide to CRA Penalties and Interest
The Canada Revenue Agency (CRA) requires that tax returns are filed on time. If returns are filed late, CRA penalties and interest charges can apply, and these can often be quite significant. The CRA charges late filing penalties as well as compound daily interest on any unpaid taxes.
Therefore, it is important to resolve late tax filing situations and other tax problems as soon as possible. Otherwise, the fees and penalties continue to add up.
If you have filed your taxes late, or have not filed taxes as you should have, Farber Tax Solutions can:
- Review your tax situation and determine the best course of action
- Negotiate with the CRA to arrange a payment plan
- Request that the CRA waive penalties and interest charges, depending on the circumstances of your situation
The Penalty for Filing Taxes Late
If you owe taxes and file your income tax return late, the CRA immediately begins to charge interest and penalties. If you do not file on time, the CRA charges a penalty of 5% of your balance owing plus an additional 1% each month that your return is late, to a maximum of 12 months.
However, if you were also charged a late filing penalty in any of the previous three years, the late tax return penalty can increase. In these situations, the CRA can charge a penalty of 10% of the balance owing plus 2% for each full month that the return is late, to a maximum of 20 months.
As you can see, these costs can add up very quickly. Therefore, even if you are not able to pay the balance owing on your taxes when your return is due, you should still submit your returns on time to avoid the late filing penalty.
If you do not owe taxes, the CRA will not charge you a penalty for filing late. However, certain benefit payments, such as the Canada Child Benefit, will be delayed until you file.
Having CRA Penalties and Interest Waived
The CRA can, at its discretion, waive penalties and interest charges (including the penalty for filing taxes late). These situations are commonly referred to as taxpayer relief provisions.
However, such relief typically only occurs in situations where taxpayers are unable to meet their tax obligations due to circumstances beyond their control, such as medical emergencies, mental distress, natural disasters, CRA errors and delays, and other such situations. You must apply to receive taxpayer relief and your application will be reviewed and either accepted or rejected.
If you are considering requesting taxpayer relief, it is important that you approach the situation correctly as a mistake can lead to an unsuccessful request.
Trust Farber Tax Solutions to review your situation, provide you with guidance, submit your application, and communicate with the CRA on your behalf.
The dedicated Farber Tax Solutions team is made up of ex-CRA, accounting, and legal professionals who have the experience and knowledge needed to effectively communicate and negotiate with the CRA. Working with a trusted professional gives you the best chance of success.
The CRA Voluntary Disclosure Program
The Voluntary Disclosure Program (VDP) is designed for those who failed to file previous year tax returns or who omitted information from filed returns. It is designed as a “second chance” to notify the CRA of unreported income or mistakes. It also allows people to file returns that have not been filed. If you are accepted by the VDP, the CRA could waive penalties and interest charges.
However, you must provide the CRA with this information voluntarily, before the agency contacts you regarding your taxes.
Trust Farber Tax Solutions to accurately prepare your VDP application, giving you the best chance of being accepted to the program and having interest charges and penalties waived. Please arrange for a free consultation to discuss your tax situation
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