Canada income taxes previous years – There are Penalties and Interest Fees

It is possible to file your Canada income taxes previous years returns easily and safely. The CRA expects you to come out voluntarily and use the preset mechanisms for reporting undisclosed earnings. There is no danger of being prosecuted or jailed as long as you volunteer information you have been hiding. Without utilizing the mechanism properly, there will be penalties and interest fees you will be charged because of filing your previous year’s taxes behind deadlines. Dealing with the Canada Revenue Agency directly will not be easy. Like most taxpayers you might want a tax consultant to lend you a hand.

Canadians were required to file their annual taxes by 30th April the following year. Did you miss the deadline? If you missed it you are definitely in for punishment. Canada income taxes previous years filing penalties are clearly defined by the CRA. If you owe taxes for one year alone, and have never failed to file tax returns on time, the CRA will charge you a late filing penalty that will be equal to five percent of your pending balance for the year. Apart from the penalty, you will pay one percent of your pending balance each month your tax return is late for a maximum of one year. That is a total of 17% for just one year late filing.

If you have failed to file your taxes in the past, your Canada income taxes previous years return will be treated differently. The CRA will demand a ten percent late-filing penalty. You will pay ten percent of the owing amounts and then two percent of the owing amounts for every month your filing is late until twenty months are over. As you can see, the penalties can be increased for taxpayers who have defaulted in the past to 50%. So, it is clear that anyone who has not yet filed their taxes is subject to the above-mentioned penalties.

There are interest charges too that are demanded from those who file late returns.  For instance, those who did not meet a year April 30th deadline began to accrue a compound interest from May 1st the following year. This interest is charged on any outstanding amounts for that late filing year. Note that if you had already received a Notice of Re-assessment, the interest rate will be based on the new balance.  It is important to note that the CRA reserves the right to charge interest on your penalties and they can change their interest rate every ninety days. If you have unpaid taxes for years, the CRA will continue charging compound daily interest on those dues. Your Canada income taxes previous years balances could be doubled after few years.

If you have reasonable circumstances that made you miss the tax return deadline for this year, the CRA could cancel or waive your late-filing penalty or any interest charge. To apply for waiver of penalties and/or interest charges, complete Form RC4288 and request for the Taxpayer Relief. Then submit your form to the relevant intake centre. If you need help with this or with your Canada income taxes previous years filing process, look for a knowledgeable and reliable tax consultant.