Late tax filing is a common problem among global tax payers. If you live in Canada, and have not paid your 2013 taxes, you will face a serious penalty starting May 6th this year. According to CRA (Canada Revenue Agency), you will be charged a daily interest (compound interest) on any outstanding balance for 2013. If you also have pending amounts from prior years, a compound daily interest will continue to be levied.
Note that the CRA will also impose you an interest on the penalties thrown at you from the day after your tax return should been received. As stated on the organization’s official site, interest rates can be altered every three months. Late tax filing will clearly land you into a big problem with the Canada’s tax collector. If you have cumulative balances from previous years, the CRA officials will allot each payment you make now to those amounts.
A late tax filing penalty will be imposed on you as well, if you owe taxes for 2013, and if you will fail to file your tax return for the same year on time. As stated on the CRA site, a penalty of five percent of the tax amount you owe for 2013 will be charged. What’s more, one percent of the accrued balance will be levied for every month your tax return is late up to a total of twelve months.
Since you already know the amount you have not returned, you can do the computations based on the above-mentioned percentages. Late tax filing for the years 2010, 2011 and 2012 will even attract a harsher penalty for 2013. You could be asked to pay up to ten percent of your 2013 outstanding debt and a two percent of the same debt amount will accrue for every full month your tax return is late for a total of twenty months.
It could be that your late tax filing was caused by genuine issues that are understood by the CRA. There is legislation that gives power to the Minister of National Revenue to be able to:-
- Waive/cancel an interest or a penalty
- Recognize income only elections that can be amended, revoked or filed late
- Give a refund to or minimize the balance payable past the 3-year duration. This is only applicable to testamentary trusts and persons.
The taxpayer relief provisions legislation gives the Minister of National Revenue power to cancel or waive penalties or interests if the following circumstances have occurred:-
- A financial adversity that has made a taxpayer become broke, leading to late tax filing.
- Extraordinary problems such as natural or man-made catastrophes (floods or fire), interruptions in service delivery, a severe accident or sickness and family deaths that cause mental suffering.
- CRA actions
Circumstances that would let you file an election are stipulated in the Income Tax Act. Elections are, however, not acceptable if they are filed on a date other than the one stipulated for an election to be filed. To learn more about late tax filing and CRA tax elections that can be amended, filed late or revoked, you can read its official website.