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.