Avoid tax penalties and interest
October 8, 2014 - 0
Canada Revenue Agency (CRA) imposes various penalties and interest to encourage people and businesses including corporations to file tax returns and pay taxes on time.
For people, the failure to file and/or pay invariably involves personal tax returns and taxes owing.
Businesses need to deal with additional taxes such as payroll source deductions, GST or HST as the case may be, and corporate taxes. The remittance schedules for all of these taxes do vary based on its sales, size of payroll, government regulations and other factors. It is vitally important for each business to be aware of the deadlines and make sure the books are up to date for accurate and prompt filing and payment.
Here are a few of the penalties and interests imposed by CRA:
- Interest on unpaid amounts owing.
- Late filing penalties.
- False statements or omissions penalties.
- Installment interest and penalties.
- Missed T slips penalties
In a perfect world we would all file on time and pay the taxes that are due. In the real world that isn’t always possible but:
- Late filing penalties can be avoided by filing on time. You are going to have to file at some point in time anyway. Even if you can’t pay the tax now, you should still file your tax return promptly.
- The current penalty for late filing of GST/HST is 1% of the balance owing plus .25% of the balance owing for each full month that the return is late, maximum 12 months. The penalties for source deductions are even more severe. If you have been charged with a late filing penalty previously the percentages could double.
- If you file on time but can’t pay on time you can at least avoid the late filing penalty. You will still be charged interest on the unpaid amount owing until you have paid in full.
- Interest on unpaid amounts can be avoided by prompt payment but if you’re unable to pay the whole amount contact CRA to arrange a payment plan. CRA is generally cooperative with reasonable payment plans.
Contact us for more information.