Late Tax Returns
Allan Madan, CA
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.
Disclaimer
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.
ABOUT THE AUTHOR
ALLAN MADAN
CA.CPA.CGA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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Are you able to reduce penalties and interest from past due returns?
Hi Olga,
Yes, you can reduce interest and penalties on past due returns through the voluntary disclosure program (VDP), which is part of the CRA. As a Chartered Accountant in Mississauga, I have filed past due tax returns with the VDP and have successfully waived interest and penalties for clients.
I filed my income tax for 2011 late and it was processed March 11th, they had me fill out a validation questionnaire asking for proof that I am the primary caregiver of my children, I didnt have ANY of the supporting documents they were asking for and so the only solution I could think of was getting my social worker to validate that I have my children, and I phoned the CCTB line april 11th and it said I was going to recieve my CCTB, They owe me 10 months worth this april. And I checked my account today and I only received April’s CCTB, do you have any idea why they haven’t sent the remaining 9 months worth of CCTB?
Dear Heather,
Thank you for your question. It may be because they approved your CCTB from April going forward. The CRA is a large bureaucratic organization and as such, errors do occur. If you believe that the CRA rightfully owes you past 9 months of CCTB, I suggest that you keep contacting the CRA and/or engage in a service of a qualified tax accountant to assist you.
– Allan and his team
I hadnt done my tax’s in 2 years and just received a validation questionnaire from the CRA about my CCTB payments requesting proof of residency and proof that i am and have been the primary caregiver of my daughter for the past 2 years i can provide doctors notes from my doctor but am unable to obtain my previous lease’s as i have moved 3 times since then, i requested information from my social worker to provide to them but she wont help me, her exact words were “i dont know you. so no” as my case just got transferred to her a month ago (because i moved to a different area) what can i do?
Hi Stephanie,
We would advise you to contact the CCTB office to determine which documents will be considered valid documents for proof of residency. This document discusses a similar issue – http://www.oto-boc.gc.ca/rprts/spcl/rprt-prvngstts-eng.pdf
Please see Jason’s story on page 10 of the pdf.
Good luck!
will i recieve my june cctb & ucctb if i didnt fike yet or made a late file?
Hi Iylena,
You will stop receiving the Canada Child Tax Benefit if you do not file your tax return with the CRA. Retroactive payments will be made once you file.