Far too often I have had new clients come to me after having done their own taxes, making a mistake, and getting penalized by the Canada Revenue Agency (CRA). The CRA have the ability levy significant penalties if tax returns are not done correctly, usually when income is under reported.
If you under report income for a second time in four years you will be subject to a federal and provincial repeated failure to report income penalty, whether this was an honest mistake or an intentional omission. If you failed to report income for your 2011 tax return and you had also failed to report income on any of your 2008, 2009, or 2010 returns you would be subject to a 10% fine by BOTH the federal and your provincial/territorial Government.
For example if in 2008 you forgot to include a T5 that you received from your bank showing $50 in interest income and then in 2011 you started renting out your basement suite for $1200 a month and decided not to or forgot to include the rental income on your income tax return, you would receive a failure to report income penalty totaling $2,880 ($1,200 x 12 months x 20% penalty). As you can see a significant penalty could potentially arise out of a couple of simple mistakes.
If you realize that you have made this error and could be subject to this penalty you may choose to voluntarily disclose this to the CRA and they may waive the penalties.
To ensure that you are completing your tax returns properly and thus not subject to CRA fines and penalties you should have a professional accountant complete your taxes. If you need assistance disclosing past errors to the CRA or if you want the peace of mind of a Chartered Accountant completing your taxes to avoid future errors 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.