Working on your taxes could be cumbersome. Many people consider it like an appointment with their dentist. However, dentist appointments can be delayed whereas tax filing cannot. Canada...Read More
It is the responsibility of all individuals residing in Canada to file and Refund the tax. However, some people don’t pay taxes in a timely manner.
Therefore these questions arise:
- What happens if I don’t file my taxes on time?
- When is the deadline to file taxes?
Before you learn what happens if you don’t file your taxes in Canada, it is important to understand when the deadline for paying taxes is. If the deadline has not passed, you are in luck!
The deadline for filing taxes is on the midnight of 30th of April. This can sometimes vary (due to COVID-19, the deadline was moved to September 30th for 2020). But what would happen if you miss filing by the deadline? The answer varies based on whether you owe taxes or not.
If you file for taxes in Canada by 30th of April, you can avoid penalties and interest. However, you will still be able to continue with filing for taxes until 30th of September. Since you have surpassed the deadline, you will have to pay penalties at the time of filing your taxes.
What would happen when you don’t file your taxes?
The government of Canada is expecting you to make tax payments in a timely manner. In fact, the government is expecting people to pay their taxes even if they pass away in the middle of the tax year. Hence, you should never ignore making the tax payments in a timely manner.
If you don’t owe any taxes, you will not have to pay any penalty. However, your benefits, credits and tax refunds will be delayed. It is always a good idea to file taxes by the deadline. That’s because a large number of your credits are based upon the information in the tax returns.
For example if you are over 19 years of age, only then you are eligible for GST Credit. In addition a lot of the benefits are based upon the family income. In case if the government is not aware of your income, you cannot expect the government to provide you with the credits.
If you owe taxes, but you fail to file them in a timely manner, you will have to pay penalties. These penalties will start from the 1st of May. Along with the penalty charges, you will also be paying interest on the amount of taxes that you didn’t pay.
Usually the penalties would start at 5% of the total amount that you owe. Moreover, 1% of the balance would be added every single month where the return is late. Compound interest will be calculated on the total amount due. In case if you don’t file for taxes for more than one time during a four year period, you will have to pay double the penalties.
Some people are notorious and don’t report their income. If you don’t report your income twice or more within a duration of four years, you will be subject to a penalty called “Repeated failure to report income”. This can be a massive penalty. It can be up to 20% of the total income that you earn in a given calendar year.
Investigations by CRA:
People who don’t file their taxes at all will be subject to investigations that are conducted by the CRA. Investigations can begin as a result of under reporting your income and or over reporting your expenses. It is against the law to fudge your tax figures. Then the government conducts proper investigation on the finances.
During such an investigation, the CRA can chase after your income, which was never filed under the income tax returns. On the other hand, you can expect the CRA to go after businesses that were not registered for HST or GST.
Taking things to the court:
If it is proven that you purposely missed making tax payments, you will have to face a court trial. The CRA will handle this court trial. When you take a look at the history, you will notice how numerous people have been subject to court trials like this and how they have had rulings against them. For example, a chiropractor based in Manitoba purposefully skilled making tax payments and he was fined for an amount of $162,512. In addition to this, he was also sentenced to a period of six months in jail.
Tax evasion is a very serious offense in Canada.
The Income Tax Act outlines all of the penalties that are in place for tax evasions. When you go through this list of penalties, you will never come across the need to skip making your tax payments in the future. In fact, tax evasion is considered as a hybrid offence according to the law of Canada. As a result, the Crown will be able to treat that as a summary conviction or as an indictable offense.
Final words about tax refund canada:
Now you have a clear understanding about the consequences that you will have to experience if you failed to make tax payments in a timely manner. Make sure that you keep these in your mind and file your taxes before 30th of April. If you are facing any challenges to do it, you can always think about seeking the assistance of an expert tax consultant. Taxants.ca is one of the top rated firms when it comes to getting your taxes filed from the convenience of your home. Give them a try if you need help.
Read more at Taxants.
WHAT IS THE CANADA EMERGENCY STUDENT BENEFIT?
The CESB is a $5.2 billion financial support plan for post-secondary and recent graduates. It is expected to help at least one million students.
It will provide a flat-rate benefit of $1,250 a month ($312.50 per week) for up to four months between May and August 2020.
Eligible students who have dependents and those with disabilities will receive $750 in additional benefits for a total of $2,000 per month to match the CERB.
WHO QUALIFIES FOR THE CESB BENEFIT?
The CESB applies to students who are ineligible for the CERB benefit or EI and who are unable to work full-time due to COVID-19.
Based on currently available information, the benefit will apply to students who meet the following criteria:
- · Post-secondary students who are currently enrolled in a program leading to a degree, diploma, or certificate. The program must have a duration of at least 12 weeks
- · High school graduates who have applied for and will be starting post-secondary education in the coming months (before February 1, 2021)
- · Recent graduates who graduated no earlier than December 2019 and are unable to find work due to COVID-19
- · Canadian students who are studying abroad and meet one of the above criteria
The student must be a Canadian citizen, registered Indian, permanent resident or protected person. International students do not qualify for the program.
Students who apply for the CESB can continue to find work and earn up to $1,000 while receiving the CESB.
HOW MUCH WILL I GET FROM THE CESB?
You will receive $1,250 every month for up to 4 months (May to August) if you remain eligible. Students who have dependents (e.g. kids under 12 years old) or who are disabled will receive $2,000 a month.
A disability is defined as “any impairment, including a physical, mental, intellectual, cognitive, learning, communication or sensory impairment — or a functional limitation — whether permanent or episodic in nature, or evident or not, that, in interaction with a barrier, hinders a person’s full and equal participation in society.”
The first CESB payment period will start from May 10, 2020, to June 6, 2020. Eligible students can apply for up to a total of 16 weeks of benefits if eligible.
You will need to apply for each 4-week period. The eligibility periods until the end of August are:
- · May 10 to June 6, 2020
- · June 7 to July 4, 2020
- · July 5 to August 1, 2020
- · August 2 to August 29, 2020
High-school students who are just graduating and meet the eligibility requirements can only apply for an eligibility period that falls after the date of their graduation.
While on CESB, you can work and earn up to $1,000. Essentially, you can potentially “earn” up to $3,000 if you are able to find part-time work over the summer.
A second initiative, the Canada Student Service Grant (CSSG), will provide up to $5,000 to students who volunteer in their communities under a new National Service initiative.
HOW TO APPLY FOR THE CESB
As per currently available information, you will be able to apply for the benefit via CRA MyAccount starting on May 15, 2020, at 6 a.m. ET.
IS THE CESB BENEFIT TAXABLE?
Similar to the CERB, the CESB is considered to be taxable income.
Most students won’t have to worry about paying taxes on the benefit, however, considering that the 2020 federal basic personal tax credit cancels out taxes on the first $13,229 you earn in income this year.
Add in the tax credits from your tuition payments and you can probably earn close to $20,000 without paying taxes.
CERB VS. CESB
The CERB provides $2,000 per month to workers who are unable to work due to COVID-19.
To be eligible for the CERB, you must have earned at least $5,000 in 2019 or in the 12 months before your application. This is not so for the CESB.
Some students will qualify for the CERB and should not apply for the CESB.
The CERB pays $750 more compared to the $1,250 base benefit offered by the CESB.
DO INTERNATIONAL STUDENTS QUALIFY FOR CESB?
International students do not qualify for the CESB.
That being said, international students who meet the eligibility criteria can apply for the CERB benefit.
Also, the 20-hour rule that restricts how many hours international students can work per week has been lifted if they are working in an essential service e.g. healthcare and food supply.
This change is in place until August 31, 2020.
Applied for CERB but dont qualify?
Got two payments for CERB in one period?
Wondering how to return it to CRA?
Here are the steps:
1) Use CRA My Account starting May 11, 2020 to repay it
2) Mail a cheque to “Receiver General for Canada” and indicate that its for for “Repayment of CERB” for “eligibility period” along with your SIN to Revenue Processing – Repayment of CERB, Sudbury Tax Centre, 1050 Notre Dame Avenue, Sudbury ON P3A 0C3
Why repay CERB to Canada Revenue Agency?
You must repay the Canada Emergency Response Benefit if you no longer meet the eligibility requirements for the 4-week period in question. This could happen if:
- · you earned employment or self-employment income earlier than expected
- · you applied for the CERB but later realize you’re not eligible
- · you receive a CERB payment from both Service Canada and the CRA for the same period.
CERB is taxable or not?
A lot of the Canadians are wondering if the CERB is taxable or not. Short answer, YES!
You will receive a T4A tax slip for the amount of CERB you received this year. You must include this in income when filing taxes for period January – December 2020.
More information can be found on CRA’s website.
Read more about Tax issue at Taxants.
Notice of Assessment, commonly known as NOA, is a document Canada Revenue Agency (CRA) mails after you file your taxes.
It consists of:
- · your refund amount
- · tuition carry forward (both federal and provincial)
- · Tax Free Savings Account (TFSA) contribution limit
- · Registered Retirement Savings Plan (RRSP) contribution limit
If you have misplaced your NOA, you can access it from CRA My Account. Otherwise you can have your authorized representative (accountant) download it from CRA’s portal on your behalf.
Remember, first time filers don’t have a Notice of Assessment because its the first time they are filing taxes. Whenever CRA makes a change to your tax file, they issue a Notice of Re-assessment that describes the changes and why its made. We will cover Notice of Re-assessment in another blog.
Taxants.ca and its team understands the importance of helping the community in its fight against Novel Coronavirus. We believe together we can overcome anything.
When we heard Savemax Real Estate Inc. and Workeefy Inc. have partnered to fund raise, we couldn’t help but support them. Their goal is to fund-raise $50,000 for the front line workers who are working day and night. We are more than happy to participate in it.
Lakshay Gandhi, Founder of Taxants.ca has pledged to help meet the fundraising goal. He believes “Canada is a rewarding country for hardworking and business oriented people like myself. The least we could do is to participate in efforts like these to help the community and its citizens who are working non-stop away from their families to serve the people”.
Thanks Savemax and Workeefy for giving us an opportunity to be part of this fight against virus.
ProteCt yourself from Scams
There are numerous CRA scams that prey on Canadians. It is our responsibility to be vigilant and never give out personal information over the phone.
Mostly these scammers demand information related to Social Insurance Number, credit card number, bank account number, or passport number. This is your personal information and must be protected at all times.
The CRA will never:
- · use aggressive language or threaten you with arrest or sending the police
- · ask for information about your passport, health card, or driver’s license
- · demand immediate payment by Interac e-transfer, bitcoin, prepaid credit cards or gift cards from retailers such as iTunes, Amazon, or others
- · leave voicemails that are threatening or give personal or financial information
Students are required to file taxes in Canada every year. Many students ask, should i file taxes if I didn’t have any income to report? The answer is “YES!”.
Even if you don’t have any income you are eligible to claim benefits. To find out which benefits you are eligible for, read our blog relating to Benefits and Taxes in Canada.
So you must be wondering, what are the documents required for filing taxes with Taxants.ca?
- · Social Insurance Number
- · Income documents
- · T4 form issued by your employer (Employment income and deductions)
- · T4A (Scholarships and bursaries)
- · Uber/Skip the dishes summary from your accounts if you participated in ride sharing or meals delivery services
- · Expense documents
- · Tuition Form T2202A – Available on your college website
- · Rent/lease agreements
- · Direct deposit form – this can be obtained from your bank’s website
- · Piece of identification – driver’s license or student ID
By all means this list covers most but not all. Our accountants go through a list with you over the phone once you submit your tax files through us.