Many were surprised when the Canada Revenue Agency (CRA) didn’t extend the tax deadline this year. The pandemic rages on, and tax specialists across the country warned officials that this year’s complicated tax filings (thanks to SERP payments) and public health restrictions could led to more late filings.
But let’s face it: as of now, this Friday (April 30) is the deadline for filing your taxes. If you miss that deadline, here are some of the consequences you could face.
Late-filing penalties and interest
Late filers who owe taxes will face some hefty charges for missing the April 30th deadline. For one, you’ll pay a 5% late-filing fee applied to your tax bill. On top of that, you’ll pay 1% of your owed balance for each full month you fail to file (up to 12 months).
That penalty alone can be severe. But it’s even more severe if you’re a frequent late filer. For those who filed their taxes late in any of the previous three tax years (2017, 2018, or 2019), your late-filing penalty could increase to 10% with a 2% charge for each subsequent month of unfilled taxes.
Yeah, that’s a lot. But, unfortunately, it’s not all. Starting May 1, the CRA will charge compound interest to any unpaid tax balance, which can really drag you down. How much you pay in interest depends on your balance, and it could change every quarter (you can find a list of quarterly interest rates here).
Interruption of benefits
If you receive assistance from the government, filing your taxes late could jeopardize your benefits. The CRA needs your 2020 tax information in order to determine if you’re still eligible for certain assistance programs. By not filing, the CRA may delay your relief payouts, and it could take up to two months for benefit payments to resume (after you file your taxes, that is).
Government programs that could be affected include the following:
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Sickness Benefit (CSB)
- GST/HST Credit
- Canada Child Benefit
- Guaranteed Income Supplement (GIS)
Keep in mind that filing your taxes late could affect certain provincial and territorial benefits, too.
Even if you don’t owe taxes, don’t think you won’t face penalties for not filing. The CRA considers unfiled taxes as tax evasion, and depending on how long you evade your tax filing, they could pursue you with legal actions. The penalties for tax evasion are harsh — far more costly than the time it takes to file. You’ll pay court-imposed fees, get a criminal record, and possibly serve prison time.
Don’t miss Friday’s deadline…
No matter what happens between now and Friday, prioritize getting your taxes done. The CRA won’t hesitate to track you down, and if you owe taxes, the penalties for not filling can become especially burdensome.
Even if you can’t afford to pay your taxes, file them anyway. By filing before or on Friday’s deadline, you’ll avoid the tax-filing penalty as well interrupting benefit payments. If you need help with taxes that you owe, don’t hesitate to reach out to the CRA. They’ll listen to your situation then help you set up a payment arrangement that works best with your budget.