Filing Canadian Income Tax Late
Taxpayers are only human and sometimes we fall behind on our tax filings. Marital breakdowns, family emergencies and mental health issues are just a few of the reasons taxpayers are unable to file their returns on time. Life has a way of changing our routines and habits, and for an unfortunate few, this means that they miss their Canadian income tax filings. Before you know it, a few years have passed, and a subtle slip-up is now several years of backlog.
Understanding taxpayers rights
Eventually, especially for Canadian residents, the CRA catches up with taxpayers and rectifies the balance owing. At this point, late penalties will be an inevitable part of that balance, and the CRA can even garnish a taxpayer’s bank account if they deem it appropriate to do so.
A delinquent taxpayer doesn’t need to wait until the CRA catches up either, and this burden typically weighs heavily on the minds of many who know what’s coming down the road. An easy and helpful first step to take is to hire a professional tax advisor to help navigate through various options and clarify where taxpayers stand with their rights.
Once a professional who understands the Canadian tax regime is hired, catching up on tax filings becomes a manageable process.
Finging missing information, tax slips, etc
Part of managing this process leads us to the second step – locating all of the information, tax slips, receipts, etc. for the unfiled years. This part is often the most daunting part of the process, and often the part that leads taxpayers to avoid catching up on previous filings altogether. Don’t despair – there is hope! The CRA already has a lot of income information about taxpayers in its database.
Parts of this database are available for online access to the taxpayer or the professional representative the taxpayer chooses to use to deal with the CRA. By simply giving the tax advisor authorization, the tax advisor is granted the same access as the taxpayer. The point is, locating all of the information, tax slips, etc. is no longer impossible. Note that there could still be missing information that the taxpayer and the advisor would need to figure out together.
Avoiding late filing penalties
Another reason it is beneficial to deal with a professional is that there may be circumstances where information returns are also late and late filing penalties would apply unless the taxpayer uses the voluntary disclosure program (“VDP”). This program is available to taxpayers if conditions for eligibility are met. Eligibility could be questionable for taxpayers who are several years behind in their filings. For these taxpayers, it is highly likely that the CRA has sent demand letters for outstanding tax returns, which would disqualify them from VDP eligibility.
Related Posts on the CRA & Late Income Taxes
- Late Tax Returns & Getting Mortgage or Credit
- CRA’s Voluntary Disclosure Program (VDP)
- How to Avoid or Navigate Through a CRA Audit
Mew & Company, Chartered Accountants in Vancouver B.C.
If you are burdened due outstanding returns, go to a professional tax advisor before the situation escalates further. Getting caught up won’t necessarily be pain free, but catching up on your filings is inevitable and necessary on a long enough timeline.
For help filing your income tax late and utilizing any programs that may be applicable to you such as the Canada Revenue Agency’s Voluntary Disclosure Program, give Mew & Company, Vancouver professional chartered accountants a call at 604-688-9198.
