Tax filing late penalties and interest rates are common with the Canada Revenue Agency. The CRA does not want to be owned even a penny and it has big fines to discourage tax evasion.
For every amount you have not paid there will be a penalty and an interest charge. Needless to mention, you should pay your taxes on time even if your tax reports are incomplete. There will be a chance to file changes to your tax returns at a later date.
Avoiding tax filing late disappointments and embarrassments should come first and naturally. The deadline for paying your Canadian 2013 income taxes was May 5th 2014. This time limit was added by the CRA because of the Heartbleed bug that had attacked many websites including theirs. Tax payers were thus given a few days grace period in which they would not suffer Tax filing late fines and interest charges.
Did you hit the deadline or are you late? If you are found guilty of tax filing late offense, you will face a particular penalty as stated over and over above. It will only be imposed on you if you owe Canadian income tax and then file it after the pre-set deadline. The CRA will demand a penalty of 5 percent of the outstanding balance. Then, for every month that your tax return is late, up to a maximum of one year, you will pay one percent of the balance due.
Tax filing late penalty will be harsher if you were found guilty of the same offense in one of the previous three years. For instance, if you did not pay your taxes on time in 2012, 2011 or 2010, and you have failed to pay your 2013 taxes on time this year, your penalty will be tougher. You will pay ten percent of the outstanding balance for the current year. This is obviously double the tax filing late charge we stated above. Then you will pay two percent of the balance owing per full month that has passed without filing your income tax since the preset deadline. This penalty can extend up to twenty months. This is expensive and an unnecessary charge.
Interest charges for filing taxes late are hefty as well. The CRA will demand a compound daily interest charge on any outstanding tax amounts for 2013. Since the deadline was 5th May 2014, the compound interest charge became effective as from 6th May 2014. Also there will be a compound daily interest on any penalty or penalties charged after the deadline for filing your 2013 taxes.
Is there relief from tax filing late penalties and interest charges? Although under very exceptional circumstances, you can approach the CRA via an application and have them reduce or cancel your interests and penalties. But there are very clear reasons why your fines can be cancelled or reduced. They can be checked on the CRA website. If you are facing tax filing late issues, and you want them cancelled, we suggest you seek help from a renowned Canadian tax firm.