CRA Arbitrary Tax Assessment
What happens when you don’t file income tax returns, HST returns, or corporate tax return? The CRA files your taxes for you. That’s right, they calculate your income based on past years income and assess you an arbitrary tax amount. The arbitrary assessment amount usually does not take into account any of the tax credits or breaks that could apply. The CRA will apply interest and penalties on the arbitrary amounts and send out a notice of assessment.
The process usually starts with few letters and followed by phone calls. If the CRA does not receive an answer, the next step is the arbitrary assessment. This is usually when clients call and need our assistance. We have the expertise to file your back taxes and get the arbitrary amounts corrected through appeals and amendments. We prepare and file the returns with great detail to avoid unwanted audits and future re-assessments.
The best way to avoid this hassle is to file your back taxes even if you are not able to pay off the taxes owing. We have the expertise to negotiate with the Canada Revenue Agency to setup a payment plan until the amounts are paid off.
Contact our tax accounting firm located in Brampton and Mississauga for all your back tax needs.
Interest and penalties
If you have a balance owing for 2014, the CRA will charge compound daily interest starting May 1, 2015, on any unpaid amounts owing for 2014. This includes any balance owing if we reassess your return. In addition, the CRA will charge you interest on the penalties starting the day after your return is due. The rate of interest we charge can change every three months. See Prescribed interest rates.
If you owe tax for 2014 and do not file your return for 2014 on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2014 balance owing, plus 1% of your 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.