Procrastinating on your Tax Return(s)?
The April 30th tax filing deadline for individuals has long since passed, along with the June 15th filing deadline for those individuals with self-employment income. Although, it’s somewhat surprising how many people put off getting their taxes organized and filed on time, the reality is, that it is a pretty common occurrence.
For those of you who are procrastinating, here are a few reasons to get moving:
1) GOVERNMENT PAYMENTS WILL BE DELAYED
Your net income for the previous year determines your government payments for the next year. By not filing your 2012 return on time, you delay your Child Tax Benefit Payments, Ontario Trillium Benefit, Old Age Security Payments + HST Credits. These payments are typically paid out starting July and run through to the following June. Additionally, if you qualify for drug subsidies, you need to file to maintain this benefit.
2) LATE FILING PENALTIES
If you file your tax return late and you owe money, the CRA will charge you a late filing penalty that is 5% of the balance owing + 1% of the balance owing for each month that the return is late. If you have filed your return late in the preceding three years, the penalties increase for being a repeat offender: 10% of the balance owing + 2% of the balance owing for each month the return is late.
Along with the late filing penalties, CRA also charges you interest on the unpaid balance. Starting May 1st, you will be charged compound interest daily on the balance owing. The interest rate varies depending on the CRA’s prescribed interest rates, which are determined quarterly. Currently, the rate is set at 5%.
Although this sound quite alarming, don’t panic. If, for example, you are filing your 2013 return on June 30th and have a balance owing of $1000, the interest owed would only total $8.33. Although the interest penalty can add up, it is really the late filing penalty that is the more aggressive charge and can multiple in a hurry. Our advice, get your return filed ASAP — even if you do not have the money to pay the balance owing, the late filing penalty is immediately halted which will save you of money.
Chances are, that if you typically get a refund, and, if you income situation has not drastically change since you last file, you will likely be getting a refund. Our experience indicated that if the CRA thinks that you owe them money, they will send you a Demand to File Notice — if they think that they owe you money, you are not likely to hear from them. In this case, no news is usually good news!
Whatever the situation, the best course of action is to get your return(s) filed. If you’re getting a refund, that’s money in your pocket; if you owe, filing your return will halt the late filing penalty and that, too, is money in your pocket! Don’t delay … call us and book an appointment to come and get your taxes organized.