Missing the April 30 deadline could lead to a colossal waste of money. Here are some details to keep in mind.
Mark your calendars: Canada’s personal income tax deadline is April 30.
That means weeks of fear, procrastination and guilt. The biggest worries I hear at tax time are owing money, or having to pay penalties. I’d bet the worrywarts didn’t file last year, or the year before, or the year before that.
But, I’m here to tell you it’s not that bad. We’ve been nerding-out on the CRA website, where daily data is displayed on personal income taxes for the 2018 tax filing season. Thus far, nearly 70 per cent of filers are due for a refund averaging $1,620.
Having said that, there are a minority, 15 per cent of Canadians, who owe money and the average tax bill for these folks is $3,000. A good many of those are self-employed or retired.
If you don’t owe money and you are late filing, there aren’t tax penalties.
The repercussions for late taxes when you do owe, however, are a colossal waste of money and will cause way more stress than filing on time.
You’ll have to pay your outstanding balance, plus a fee equal to five per cent of that amount. On top of that, you’ll be charged an additional one per cent of your balance owing for each month your tax return is late, up to a maximum of 12 months. That’s just for one year. If you’re chronically late in filing, you’re going to pay more.
Rather than use your stack of tax forms as a coaster, gather them up and pop them into a trusty file folder. If your forms have been emailed to you, print them off and stash them in that folder.
Next, get a professional to help you file your taxes. Get a referral to a local tax professional from a friend, or head to H&R Block. Fees range from $60 to $300, depending on the complexity of your return.
You can certainly DIY with tools for under $25 like TurboTax or UFile, but not if you’re late or if you have multiple streams of income.
These cases are complex and you run the risk of making a mistake, which can trigger financial penalties far greater than the fee you’ll pay your tax professional. I made an error a few years ago and had to pay over $100 back to the CRA. What’s worse is if you make repeated errors you can be reassessed. This will land you on CRA’s hit-list for an audit, where all expenses are generally paid by you.
Replace missing forms
Disorganization can lead to all kinds of headaches. If you miss filing a tax form you could also be reassessed. This can result in a delay of your tax refund, or in worse cases, a financial penalty. Avoid this completely by checking your data in CRA’s My Account. Once logged in, you’ll be able to see electronic versions of your T3s, T4s and T5s. You can also access other useful documents like your RRSP contribution room and then sign up for the direct deposit of your refund.
A refund is likely at your fingertips. So, file your taxes.
Published by Metro News April 9, 2018.
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