Procrastination usually results in missed deadlines. As life gets busy, you may forget to file your taxes. Also, you may fail to file due to the complexity of your tax situation such as having several sources of income, business activities, or investments. Usually, major life changes such as marriage, childbirth, or divorce and personal issues such as a family emergency or an illness can affect your tax situation or filing routine. No matter the case, unfiled returns can harm your future financial health. Because of this, you need to take preventative measures to ensure timely tax filing. This includes hiring Padgett Business Services and understanding the consequences of not filing tax returns in Canada.
Why File Your Tax Returns on Time
Filing tax returns promptly is an important responsibility for every Canadian. Whether you are filing as an individual or business owner, you can face hefty penalties when you fail to file your returns on time.
By filing on time, you have a chance at getting a refund and the benefits or credits you may be eligible for. This means that you can get some money back throughout the year. However, if you miss the filing deadline, there are financial consequences you may face. These include the following:
- Late filing fees. The CRA imposes a 5 percent penalty on your balance owing plus an extra 1 percent for every full month your tax return is late for up to 12 months. A history of repeated late tax filings can increase the penalty to 10 percent of the balance owed.
- Interest charges. Apart from penalties, interest accumulates every day on unpaid tax amounts. These amounts include the balance owed and all penalties incurred. The interest rates prescribed by the CRA can change every quarter.
- Loss of refunds and credits. Not filing your returns on time can delay your tax refunds and interrupt government benefits or credits you may be entitled to.
- Legal action. The CRA can garnish bank accounts or wages, put a lien on, or seize property to recover unpaid taxes. Repeated non-compliance may lead to criminal charges.
How to Avoid Missing Tax Deadlines
To stay on track with your tax returns, below are some steps you can take:
- Staying informed. To make sure you can pay your returns on time, know your deadlines. For the majority of individuals, the filing deadline is April 30th. Self-employed individuals can pay up to June 15; however, all balance owing must be paid by April 30. Not paying on time will lead to more interest charges. Incorporated businesses have six months following the end of the fiscal year to pay their taxes. But corporate taxes owed must be paid there months following the end of the fiscal year. Moreover, to stay informed, you can also use tax software and online tools to simplify the tax filing process. Keeping proper financial records also makes filing your tax returns easier.
- Addressing complex tax situations. If you have a complex tax situation, hire a CPA. This tax professional can help maximize your tax deductions and credits while ensuring you stay compliant with tax laws. This will provide you with peace of mind knowing that an expert is handling your taxes.
Understanding the deadline for filing tax returns and implementing preventative measures can dramatically minimize the risk of having unpaid tax returns. Being organized and proactive with your taxes guarantees a smoother financial journey. Also, this helps you avoid interest charges and penalties. Consulting an experienced accountant for professional guidance will make filing more manageable than before. Now is the time to act to secure your financial well-being and fulfill your tax obligations.
