Understanding Tax Penalty for Late or Incomplete Filing in CA

 Tax season is a hectic time for businesses and working individuals everywhere. In Canada, as tax season is coming to a close, people are scrambling to ensure that they file accurately and on time. 

Nothing is more stressful than owing the Canada Revenue Agency (CRA) money. To give you an insight into how serious this particular issue is, here’s a quick guide on penalties and interests you should expect for filing late.

Penalties for Late Filings

Failure to file your tax return on this year’s deadline and having an owed balance to the CRA will result in various penalties. The penalty for filing late is calculated as five percent of your owed balance for 2022, with an additional one percent each entire month you file after the due date. That’s up to a maximum of 12 months. 

Moreover, if you’ve requested a formal demand for a return but the CRA has previously charged you with penalties for 2019, 2020, or 2021, your penalty for the 2022 tax season will be ten percent of your owed balance. Plus, the CRA will charge you an extra two percent each month you file after the deadline. That’s up to a maximum of 20 months. 

Meanwhile, you can request to cancel or waive any penalties or interest charged by the CRA. The agency will approve this request if you cannot meet your tax obligations because of circumstances beyond your control. However, the CRA can only provide relief within ten years from the date of the request.

Penalties for Payment Incapability 

If you can’t file your taxes this season, you can work with the CRA to find ways to pay your debt; the CRA can arrange for you to make partial payments. However, being approved will depend on your financial situation. 

Getting a plan from the CRA allows you to spread your cost to reduce the interest you must pay from unpaid amounts. When you apply for a special payment option, the CRA will work with you until you pay in full.

Remember that if you can’t pay your tax debt in full, you must notify the CRA as soon as possible. If you do so, they can determine a manageable payment arrangement for you.

Preventing These Issues

Knowing the deadline before filing is the biggest factor in avoiding issues during tax season. You can be more prepared for it by marking such an important date on your calendar and setting early reminders. 

Another way to prevent problems is to gather all the necessary documents months before the deadline. Gather all the relevant files, organize them better, and make them easily accessible. Doing this will help you save time and reduce the chances of misplacing essential papers. 

Lastly, always seek the help of a specialist, be it a tax preparer or accountant. There are various service providers in the country that you can trust for such an important task. In Toronto, one of the best firms you can go to is Faris CPA. Tax audit experts like Faris CPA can help you gather all the necessary documents and file your returns accurately and on time.

File Correctly and Punctually

If you’re one of the unfortunate ones that can’t pay taxes on time or at all, it’s best to be open about it. Communicate with a tax specialist and the CRA if you can’t meet this season’s deadline. Once you deal with all the penalties, it’s best to prepare yourself for the upcoming tax season to avoid them.