Do you have late or past due tax returns that you need to file? Don’t wait any longer, and contact your local Canadian accountant, as there are many advantages to catching up with the taxman.
This article addresses the top 5 reasons to file your past-due or late tax returns:
1. Get tax refunds
In many cases, you may be eligible for a tax refund, which you can only receive by filing your tax return. A tax refund may result because of RRSP contributions made, child care expenses incurred, large amounts of taxes withheld from your paycheque, and many other reasons.
In the 2009 year, many families are receiving a one-time payment for the Ontario Transition Sales Tax Credit, which is an Ontario tax give-away to compensate taxpayers for the increase in sales taxes to 13% as of July 1, 2010 (HST).
So make sure you file your late, past due to tax returns to collect your tax refund cheque.
2. UCCB & CCTB
The Universal Child Care Benefit ($100 per month per child) and the Canada Child Tax Benefit are only paid to those individuals have filed their tax returns. Therefore, if you have children and haven’t received any UCCB or CCTB payments thus far, make sure you file your overdue tax returns. Likewise, CCTB payments may stop being paid to you if you have past due tax returns.
3. Reduce interest and penalties
If you owe money to the Canada Revenue Agency, procrastination won’t help to reduce the amount you owe. Interest will accrue at an annual rate of 5% and penalties can amount to 17% or more.
Therefore, if you owe money, please make sure that you file your past due tax returns to minimize any interest or penalties.
4. Applying for a mortgage or loan
When applying for a mortgage or loan, the bank will want to see your latest Notice of Assessment to verify your income. If you don’t have that available, because of overdue tax returns, you may be out of luck for your next home purchase or loan.
5. Demand notice from the CRA for late, past due tax returns
The CRA will send a demand notice to file your returns, followed by an “Arbitrary Assessment” if the returns aren’t filed. An arbitrary assessment means that the CRA will assess your return based on the information they have received, and will not provide for any deductions that you may be entitled to. In other words, an arbitrary assessment is the worst-case-scenario and results in an overstated tax balance.
Additionally, the Canada Revenue Agency has the power to garnish your wages for overdue tax balances, seize your bank accounts and even seize your property.
To make sure you don’t end up in a situation where the CRA is confiscating your property, it’s advisable to file your late, past due tax returns and seek the advice of an accountant.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.