Taxation has been an integral part in running the country and provide benefits to people. In taxation, meeting deadlines is not just a part of habit; it’s also financially important. The approaching date of 30th April 2024 is particularly important as the Canadian tax season for 2023-2024 comes to an end.
Both individuals and businesses must file their taxes before the given date. However, those who miss this deadline, they will face penalties which can potentially impact one’s financial standing. This article will delve into the consequences if one doesn’t fill the taxes before 30th April then tax penalties which can be imposed.
Canada Late Tax Filing Penalty 2024
Tax filing or tax returns in Canada refers to the process by which individuals and businesses in Canada announce their yearly income, deductions through income tax, noting eligibility for tax deductions or credits, and other relevant financial information to the Canada Revenue Agency (CRA). CRA then checks the provided information to determine the amount of income tax owed or the potential refund due to the tax payer and decides whether the person is eligible for refunds and other benefits.
When it comes to Canada late tax filing penalty, it’s essential to understand the consequences. If one misses the deadline, then the penalty is imposed by CRA which charges compound daily interest on unpaid amounts. The amount is calculated based on balance person owes and the number of months he is late.
If one requires for requesting relief, then they can request CRA to waive penalties or interest with appropriate documents. Relief can be granted within 10 years of request date.
Canada Tax Filling Penalties An Overview
| Name | Canada Late Tax Filing Penalty |
| Country of Origin | Canada |
| Regulating body / Department | Canada Revenue Agency (CRA) |
| Year | 2024 |
| Category | Government Aid |
| Objective | Pay taxes on time to build the nation. |
| Applicable persons | All residents of Canada who are eligible to pay taxes. |
| Age Limit | 19+ years |
| Maximum Penalty amount | $5000 |
| Last date to file taxes | April 30, 2024 |
| Official Website | canada.ca |
What happens if one doesn’t file taxes before 30 April 2024?
If one doesn’t file their taxes before the deadline, i.e., April 30 in Canada, then they may further face several issues:
- Late Tax Filing Penalty:
- If a person files their tax return after the due date and still have some outstanding balance owed to CRA, then they will face a late-filing penalty.
- The penalty is calculated as follows:
- 5% of the remaining balance owed to CRA in the fiscal year 2023-2024.
- An additional 1% for each full month a person file late tax returns (up to a maximum of 12 months).
- If CRA previously charged a person a late-filing penalty for the year 2020, 2021, 2022, and imposed a formal request for the return though mail or post, then the penalty for 2023-2024 will be 10% of the owed balance, with an extra 2% for each full month that the return is late (up to 20 months).
- Interest on Taxes You Owe: In addition to the late filing penalty, interest charges will be imposed by CRA to any owed balance. The interest will be compounded dailystarting from the next day and is calculated based on the outstanding balance.
- Benefit and Credit Delays: Filing late may cause delays in receiving certain benefits and credits, such as the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit, Canada Child Benefit (CCB), and others.
- Financial Implications:
- CRA can take legal action, including stopping wages or placing claims on property.
- Tax debts may lead to financial difficulties, which can affect one’s credit score indirectly.
Penalty amount and interest In the Tax Dues
The maximum penalty amount is $5,000 and increases the longer one takes time to file. If the total income is less than $5,000, then the maximum penalty for delay will be $1,000.The interest rate is 1% per month, or half of the month on the unpaid tax amount.
Suppose the installment interest charges exceed $1,000, then missing tax installment due dates can result in penalties. If a person attaches fake documents or provide false details on tax returns, then a penalty of 50% of the total tax will be issued.
How to waive for tax relief or from penalty?
If a person is unable to file the penalty of the late tax returns, then they can contact CRA authorities to reduce the tax penalty or interest on overdue. CRA will consider the applications only according to certain guidelines. There can be applicable reasons to apply for tax relief if the person:
- Is suffering from a natural disaster such as fire, flood.
- Is involved in serious illness and accidents.
- Is undergoing through mental distress such as death of someone in the family or loss of business.
- Is having financial instability.
In these situations, a person can do the following:
- Online Request (CRA My Account): He or the authorized CRA representative can request to cancel the penalties online using the CRA My Account, My Business Account, or Represent a Client services. Select “Request relief of penalties and interest” under “Related services”.
- Offline Request (Form RC4288 – Request form for Taxpayer Relief): He can fill out the form RC4288 and submit it either online or mail to CRA.
The person must have necessary documents like SIN number and valid documents. They were asked by CRA to prove that he is eligible for tax relief. CRA will process the request within 8 months.
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