Tax Tip Thursday

This show is courtesy of my office manager Mary! I asked her what I should talk about and this was it!

Do Your Taxes!

“Just Because You Aren’t Doing Them Doesn’t Mean They Aren’t Happening” The CRA is not your ex.

You cannot stick your head in the sand, ignore the messages, and hope the whole relationship eventually goes away.

The CRA does not interpret silence as closure.

It does not say, “Well, we haven’t heard from Owen in four years. I guess he has moved on.”

I find it ironic that people are desperate to pay less tax, but then they wait three, four or five years to file their tax returns—and end up paying the CRA more through penalties and interest.
If your goal is to keep as much of your money as legally possible, ignoring your tax returns is usually one of the worst strategies available.
Let’s separate two things people often confuse: filing your return and paying your tax bill.
You may not have the money to pay the balance today. That is a financial problem—but it does not mean you should create a second problem by refusing to file.
If you file on time but cannot pay, interest will generally apply to the unpaid balance BUT NO PENALTIES!
If you also file late, you WILL face both interest and a late-filing penalty.

For an individual, the ordinary late-filing penalty is generally 5% of the balance owing, plus another 1% for every full month the return is late, up to 12 months.
Under the repeated late-filing rules, the penalty can potentially increase to 10% of the balance owing, plus 2% for each full month late, for as many as 20 months.
Suppose you owe $10,000 and simply decide not to file for another year.
The $10,000 tax bill is now almost $12,000 or possibly $14,000 and that does not include interest!

AND CRA interest is compounded daily. Your tax debt does not take weekends off just because you do.

Lot of people say, I am getting a refund anyway. So my first question is, don’t you want it? But the next problem is if it is more than 3 years old, the CRA has discretion as to whether to refund you or not and after 10 years, they will NOT refund you for sure!
So “I probably don’t owe anything” is not a good reason to leave ten years of returns in a shoebox.

And remember, even if it is an arbitrary assessment done by the CRA, they can:
• can garnish income,
• redirect certain government payments,
• freeze or seize funds,
• register liens and
• use other collection measures when a tax debt remains unpaid.

Get your taxes done! This IS the perfect time!

You can reach us at 905 862 2727 to make an appointment or you can google The Mad Accountant and you can make an appointment through my website.  Make An Appointment today!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.