As the deadline to file and pay taxes to the Canada Revenue Agency (CRA) approaches on April 30, many Canadians are feeling the pressure to meet their obligations. Failure to file and pay taxes on time can result in severe consequences, including losing benefits, facing stiff fines, or even jail time, according to chartered personal accountant Shayan Rashid.
Rashid explained that the penalties for late filing can be significant, with a late filing penalty of five percent of the balance owing for 2023, plus an additional one percent for each full month filed after the due date, up to a maximum of 12 months. This could potentially result in paying up to 17 percent of any balance owed.
Furthermore, if the CRA has previously charged a penalty for late filing in the past years and issued a formal demand for a return, the penalty for 2023 could increase to ten percent of the balance owing, with additional penalties for each full month filed after the due date, up to a maximum of 20 months.
Rashid also highlighted the daily compound interest charged by the CRA, which can add up quickly for those who are unable to pay their taxes by the deadline. The CRA can take severe actions against individuals who consistently file late or ignore requests, such as garnishing wages, freezing bank accounts, or placing liens on properties.
To avoid these consequences, Rashid advised individuals to file and pay their taxes on time, even if they do not owe money. Failure to do so could result in losing benefits like the Canada child benefit or the carbon price rebate. For those who are unable to pay their taxes owed, the CRA website offers options to arrange a payment plan. With just a few days left before the deadline, Rashid noted that about 10 percent of his clients had not yet paid their taxes.