Are you an eligible taxpayer in Canada? The Canada Revenue Agency, the chief administrator of the income tax system, wants you to pay your taxes on time. It does not matter whether you are needed to pay personal income taxes or corporate income taxes. The CRA has an internet-based procedure for filing your tax returns. Note that income tax Canada system requires the taxpayer to assess their tax liability before filing their tax return. It therefore makes sense to use a tax professional that understands how the CRA works.
The tax professional will ensure that you always prepare your tax returns correctly and that they are submitted to the CRA in a timely manner. There are only three things that could get you in trouble with the income tax Canada Revenue Agency.
First, if you evade taxes altogether, the CRA will catch it and will come after you. The consequences will be dire as tax evasion is a crime.
Second, if you file your taxes late, you will face a punishment in form of penalties and interest charges.
Third, you may prepare and file your taxes on time but if the CRA discovers that you have been faking figures they will raise a flag and you might get a surprise audit notice.
It is important to always ensure that you file and pay your taxes on time, ensuring that you report your taxable income in a truthful manner. The income tax Canada department will let you object a Notice of Assessment. Many weeks after you submit your return the CRA could send a Notice of Reassessment if they disagree with your reported income.
The CRA auditors might ask you for extra information to substantiate your claims. If they still think your tax return is suspicious, they will send you a proposal letter that will notify you about the pending Notice of Reassessment.
It is imperative that you hire an income tax Canada consultant to sail you through the dispute process, as they will file your Notice of Objection in a professional manner. Even as you make an effort to file income taxes, you are not allowed to have undeclared or unreported income by the CRA.
It can trigger serious consequences particularly if you ignore using their Voluntary Disclosure Program or T1ADJ form. Unreported income or late income disclosure could make you accrue interest from the date you should have filed. This interest amount will be based on the Treasury bill rate for the last three months and it could fluctuate often over the period. The CRA could also impose penalties, particularly the gross negligence penalty.
If you are a first-time offender of filing late, you will be charged up to five percent of the outstanding debt. This will be added to a one percent charge for each month you are late with your return up to a period of one year. A person who has defaulted again will pay twice for their offense. Other punishments from the income tax Canada Revenue Agency includes a court procedure that could lead to imposition of fines, loss of personal asset or imprisonment.