Filing Past Due Tax Returns
Filing taxes can be an overwhelming task with numerous things to consider. If you have fallen behind on your returns it is very important to file the past due tax returns and update your records with the Canada Revenue Agency (CRA). By filing taxes you become eligible for government credits such as GST/HST tax credit, Ontario Trillium Tax Credit (OTB), and Child Tax Benefits tax credit.
Failure to file tax returns on time can result in penalties and interest. Even if you are not able to pay the tax balance owing, you should still file your return to reduce the penalties and take advantage of the tax credits you qualify for.
If you are expecting a refund from the CRA it is even more critical to file your tax returns on time because the CRA does not pay interest until 30 days after the due date. Also the CRA can deny your income tax refund if you wait more than three years (CRA discretion to issue the refund if the return is filed within 0 years).
I have zero income should I still file a tax return?
Even if you are not required to file a tax return, it might be beneficial to file a tax return because you could qualify for government credits. It is very important to file taxes every year even if you have zero income. Eligibility for certain benefits such as the GST/HST credit or the Child Tax Benefits is directly related to your income tax returns.
If I file past due returns, can I still receive the GST/HST tax credit?
Yes, you will receive the GST/HST tax credit along with other credits you qualify for. You can retroactively qualify for the GST and OTB tax credits.
What is the late filing penalty?
The late filing penalty is based on taxes owing for a particular year. For an example if you owe tax for 2014 and do not file your return for 2014 on time the CRA will charge you a 5% penalty on the balance owing. In additional the CRA will charge a 1% penalty on the balance owing for each full month your return is late, to a maximum of 12 months.
If the CRA charged a late-filing penalty on your return for 2011, 2012, or 2013 your late-filing penalty for 2014 may be 10% of your 2014 balance owing, plus 2% of your 2014 balance owing for each full month your return is late, to a maximum of 20 months.
Even if you cannot pay your full balance owing on or before April 30, 2015, you can avoid the late-filing penalty by filing your return on time.
Who should I contact if I have to file back taxes for multiple years?
Contact our firm for all your income tax needs. We specialize in filings back taxes and reducing penalties and interest. We have several different strategies that we use to reduce penalties and interest, including the Voluntary Disclosure Program. We can help you comply with the CRA reporting obligations and minimize your overall tax bill. Contact our firm and book an appointment with our accountant Mr. Sarb Cheema.