Filing my own personal income tax return is an annual chore. I am sure you can attest to that.
ItSA国际影视传媒檚 not that I am a procrastinator. I prefer to wait till the final week because there is always that late tax slip. Okay, maybe some procrastination is involved.
You can rest assured my tax return will be filed by the April 30 deadline. If you owe taxes, it will cost you if you donSA国际影视传媒檛 file your return on time.
The Canada Revenue Agency(CRA) will charge an automatic late-filing penalty of 5 per cent of taxes owing if you are late. There is an additional 1 per cent penalty for each month your return is late, up to a maximum of 12 months. The maximum penalty is a costly 17 per cent of taxes owing. For example,
you will pay a 7 per cent late-filing penalty if you file in June (the automatic 5 per cent plus 2 per cent for the two late months).
Those are just the starter penalties for first time late-filers. Repeat offenders face more severe penalties if they owe taxes. If you were charged a late-filing penalty in any one of the previous three taxation years (2014-2016), the CRA will charge you an automatic 10 per cent for being late plus 2 per cent for each full month of delay, to a maximum of 20 months, or up to a maximum penalty of 50 per cent.
The CRA also charges interest (currently at 5 per cent annually) on your taxes owing and penalties. It
is possible, due to the interest buildup, to owe more in interest and penalties than in taxes if you
are a multi-year late-filer.
The concession is there are no late-filing penalties if you do not owe taxes. This is because the penalties only apply to taxes owing. Still, you may be playing with fire if you miss the filing deadline. Here are some reasons the April 30 deadline can become your Friday the 13th.
You can reduce your taxes, perhaps significantly, by electing to split up to 50 per cent of your eligible pension with your spouse or partner. You will lose out on this tax-saving election if you do not file your tax return within three years of the filing due date for the particular tax year. For example, you will lose out on the pension split opportunity for 2013 tax year if you have not filed your 2013 tax return as of now.
Losing out on a late pension split opportunity isnSA国际影视传媒檛 the real horror story. For that, you need to late-file your Form T1135, Foreign Income Verification Statement. This form is required if you own foreign property or investments costing more than $100,000 at any time during the year.
You are looking at a penalty of $25/day, to a maximum of $2,500, for a late-filed Form T1135.
Here is another horror story. You must file Form T2091, SA国际影视传媒楧esignation of a Property as a Principal Residence by an IndividualSA国际影视传媒� if you sold a principal residence during 2017. You will pay a penalty of $100 per month if you late-file the Form 2091, to a maximum of $8,000.
So take the April 30 tax filing deadline seriously, even if you are sure you have a tax refund.
Inadvertently late-filing your Forms T1135 or T2091, if these apply to you, will cost you a bomb.
The April 30 personal tax deadline does not apply to everyone. The filing deadline is extended to June 15 (for both of you) if you or your spouse report self-employment income from a partnership or proprietorship.
