Posted by Enoch Omololu | Updated on Apr 24, 2019
The 2019 tax filing season will soon be here and if last years timeline is anything to go by, it will kick off around the third week of February 2019. The tax-filing deadline for most Canadians (for the 2018 tax year) is on April 30, 2019. For those who are self-employed, or who have a spouse/partner who is self-employed, the deadline extends until June 15, 2019.
Filing your taxes on time is not just about the potential of tax refunds. A late tax filing can result in monetary penalties and can also delay or affect your government benefits negatively.
WHAT ARE THE PENALTIES FOR A LATE TAX-FILING IN 2019?
The government wants every penny they are owed and they want it in good time. As such, there are penalties for filing a late tax return if you have an unpaid tax balance. If you are getting a refund or your tax balance is zero, there will be no penalties for sending in your return after the deadline date.
Penalties for filing your income tax and benefit return late when you owe the Canada Revenue Agency (CRA) are as follows:
An immediate penalty of 5% on your tax balance owing plus 1% of your balance owing per month for up to 12 months is levied by the CRA.
For example, if you owe the taxman $5,000 in taxes and send in your tax return 12 months late, your tax bill increases to:
$5,000 x 5% = $250, plus
$5,000 x 1% x 12 months = $600
Late-filing penalty = $850, increasing your overall tax bill to $5,850.
This amount does not include the additional interest penalty.
If you were late in filing your taxes in previous years as well, the CRA can increase your “late-filing” penalty to 10% of your tax balance, plus 2% per month up to a maximum of 20 months.
In addition to the “late-filing” penalty, the government will also charge interest on the amount of taxes you owe, including the penalties.
Note: Although freelancers/self-employed individuals can wait until June 15, 2019, to file their taxes, any taxes owing beyond April 30, 2019, is also subject to the same penalties like everyone else.
There are some instances where the CRA may be able to waive penalties/interest on taxes owing if you can show that circumstances beyond your control prevented you from meeting your tax obligations, such as financial hardship, natural or man-made disasters, serious illness or accident, postal strike, etc.
Use Form RC4288 to request the penalty waiver.
Tax-Tip: Even if you are unable to pay CRA what you owe them in taxes, it still makes sense to file your taxes before the April 30 deadline. Doing this means that you avoid the late-filing penalty and will only be on the hook for interest payments.
Related: Filing Your taxes Using TurboTax