Late Tax Filing
Many Canadians fall behind filing tax returns each year for a variety of reasons; people:
- Don’t think that they will owe
- Know they will owe and don’t have the funds to pay
- Incorrectly believe that if they do not file they will not be found out and will not have to pay
- Have lost records and/or receipts and have no idea what they earned and don’t have the ability to estimate or prove what their expenses were
- Find dealing with their late tax filing so stressful once it has occurred that they think if they avoid it, eventually it will go away by itself
Late tax filing is serious and should never be left unaddressed.
- Not filing a tax return = tax evasion = crime.
- Each day that you are behind filing your returns you are essentially committing tax evasion. It is not against the law to have a tax debt and owe money to the CRA (Canada Revenue Agency). It is against the law to not file your tax returns!
- Each day that passes that your late tax filing is outstanding you will accrue large penalties and interest and can even be subject to prosecution.
When you are not filing, the CRA can complete a notional assessment on your behalf and estimate your income. They look at any information and make (often wild) assumptions. On that basis they can assess your tax debt, interest and penalties, and then proceed to collect the tax debt that they have estimated.
Whether your late tax filing is 1 year, 5 years or even 10 years past due, it is important to take action and get compliant immediately.
If you’re behind filing your returns you should not simply go to a tax preparer and send in a batch of returns. Once you are behind you will need to deal with professionals who have a high level of experience and who can negotiate with the CRA for you to become compliant. Late tax filing is a very serious tax problem that must be approached carefully.