Many Canadians lose their sleep over unfiled taxes Canada as they get nervous about the income that they have failed to report to the CRA. Such acts amount to tax evasion. Yet, things can be brought back on track with proper planning and professional help. The taxation system for income tax in Canada is self-assessment driven.
The taxpayers often fail to report their entire income. This is done inadvertently or due to other difficulties. There are few taxpayers who neglect filing of their tax returns completely. There are occasions when they avoid filing the tax return in one single year and get scared about filing their tax return the next year as they are afraid of the consequences of the unfiled taxes Canada.
Keeping such apprehension on part of the taxpayers in mind, the policy of CRA is to support voluntary compliance with the laws pertaining to income tax. This is promoted through tax pardon and tax amnesty. Such programs encourage taxpayers – both individuals and business corporations to voluntarily come forward to report their unfiled taxes Canada. Unfiled taxes would also include filing of GST ad HST returns.
Voluntary disclosure of previously unfiled taxes Canada will save the taxpayers from criminal prosecution apart from the burden of civil penalties and late filing penalties. Voluntary disclosure attracts a waiver of the penalties and there could be reduction even of interest charges on a negotiable basis. Such a disclosure will also apply to those individuals who have deliberately evaded their taxes by not declaring their earnings, whether this income was earned within the country or by offshore earnings. It would also involve even that income that has come in by way of criminal activity.
The timing of the disclosure is important. It is effective from the period the taxpayer or his or her representatives get in touch with the CRA. The detailed submissions may not necessarily be made at that juncture. For example, a taxpayer who has unfiled taxes Canada for many years in a row need not get them ready when approaching the CRA. But, the taxpayer will have to negotiate or come to some agreement with the CRA concerning the time period that will be needed to furnish the required information. This first approach will be taken into consideration by the CRA as the effective disclosure date or EDD.
A taxpayer who comes forward with voluntary filing of unfiled taxes Canada will be under requirement to pay the taxes due to the CRA on the reported earnings along with interest. Penalty for late filing will not be charged to the taxpayer. In the case of a taxpayer who has failed to report his or her income that includes income from sources abroad, online income which has not been reported and income from eBay which has not been reported but reports it voluntarily, only the tax amount outstanding on the income that is unreported along with interest will be charged.