For those of you who did not manage to file your personal tax return on time, you may be wondering what the consequences are for failing to file the return as well as failing to pay the balance owing on the return. The consequences come in the form of Interest as well as a Late Filing Penalty; we will discuss each of these separately.
Interest is charged on any unpaid amount owing for 2011 (or any previous tax year – this post will refer to the 2011 tax year) starting on May 1, 2012. Interest is also charged on amounts owing as a result of a reassessment as well as any penalties that have been applied to you. The interest rate that is charged is based upon the “prescribed rate” which is updated quarterly (currently in the 2nd quarter of 2012 the rate is 5%, and has been unchanged since the first quarter of 2009).
If you fail to file your personal tax return on time and you owe a balance, you will be charged a 5% penalty on the balance owing. In addition, you will be charged a 1% penalty of your balance owing for each month the return is late up to a maximum of 12 months. If you have a been charged a late filing penalty in any of the three previous years prior to the current late filing penalty, the initial penalty will be doubled to 10% of the balance owing, and the monthly penalties will be doubled to 2% of the balance owing for each month to a maximum of 20 months.
If you are behind on your taxes you should get caught up as soon as possible to minimize interest and penalties. If you need assistance getting caught up on your taxes or need any help with any tax or accounting needs please contact us at firstname.lastname@example.org , 604 510-0156, or visit our website at http://www.wattsca.ca
Disclaimer: The information in the blog is for general information only and is not intended to be a substitute for professional advice. Each person’s situation is unique, and a designated professional accountant can assist you in using the information on this blog to your best advantage. The author of this blog strives, but does not guarantee, to provide information which is current and accurate. Due to the nature of the information, it should not be relied upon for decision making without talking to a designated professional accountant. By obtaining information from this blog, you fully release Steve Watts, Chartered Accountant of any liability that may arise from using this information.