Missed the 2015 Tax Deadline – Here is what to expect next
April showers have brought May flowers…but if you missed the 2015 tax deadline this month may also bring with it a tax debt, accompanied by penalties and interest. When it comes to penalizing Canadians for late filing, the Canada Revenue Agency doesn’t fool around – and you shouldn’t either.
In Canada, the 2015 tax deadline was April 30th, and if you, like many others, missed it, here is what you can expect:
- If you owe for 2015 and didn’t file on time, you can expect to be charged a late-filing penalty of 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
- Additionally, if you missed the deadline and were charged a late-filing penalty on your return for 2012, 2013, or 2014, your late-filing penalty for 2015 may be 10% of your 2015 balance owing, plus 2% of your 2015 balance owing for each full month your return is late, to a maximum of 20 months.
Once penalties are leveraged, they will continue to accumulate and then interest is added to the debt and the penalties. You can also expect, once that assessment arrives in the mail, to start receiving notices to file your returns and pay the debt.
Not filing is not an option. If you choose not to file, you can be pursued for tax evasion and the CRA can arbitrarily assess you. This is done by looking at your current occupation and making an income estimate based on the industry standard. If you are assessed a debt based on the income the CRA thinks you earned, penalties and interest will also be applied.
So you file, but still don’t pay the debt. The next step the CRA will take is to levy collection action, which may include a frozen bank account, a wage garnishment, even a lien on your property.
When it comes to stopping collection action, or avoiding it altogether, your best bet is to pay the CRA in full. If the amount is not readily available, you may consider refinancing your mortgage or obtaining a personal loan. Another option may be reaching an agreement on repayment, but the CRA is not interested in lengthy terms – it wants to be paid back as soon as possible.
If you can’t pay, and owe enough that you would not reasonably be able to make payments to pay off the debt, in full, in 12 months, move on to plan C – in a situation where you have no assets or you have assets that have no equity, a consumer proposal may be the best option. It will result in a single payment, halted collection action, halted interest accumulation and often is the only way to reduce the principle on a tax debt.
If you are interested in discussing your options, DebtCare is here to help. We know what the CRA wants to see with regard to repayment or consumer proposal settlements and can help you achieve the best results.
Call us today at 1 (888) 890-0888.