Personal Investor: What happens when you miss the tax deadline?
When the clock strikes midnight Monday, the interest clock begins ticking on taxes owed for 2016.
If you owe money, you will owe more every single day the payment is late. If you don’t owe, the Canada Revenue Agency still wants to hear from you just in case they determine you actually do owe.
The CRA’s advice is to send whatever return you can put together.
Like it or not, the CRA has the full power of the law to get what it is owed. Lives have been ruined by small oversights that have been allowed to fester over the years. Here’s how late filing penalties start:
- Five per cent of the amount owing compounded daily, plus one per cent for each full month that the return is late, to a maximum of 12 months.
- A charge of 10 per cent of the balance owing plus two per cent for each full month, up to 20 months (subject to change every three months).
- Provincial or territorial penalties
When it comes to honest mistakes the CRA can be forgiving, but statements determined to be false or containing omissions could result in a fine of $100 or 50 per cent of the falsified amount, whichever is higher.
However, if you voluntarily report an amount you failed to report through Voluntary Disclosure Program, the CRA may waive the penalties.If you owe and simply can’t pay, the CRA can be compassionate. Taxpayer relief provisions give the CRA discretion to cancel or waive penalties or interest when taxpayers are unable to meet their tax obligations due to circumstances beyond their control.