Are you taking a risk With Your Tax Filing?
There is an old adage that there are two certainties in life which are death and taxes. What is not debatable is the notion that if you try to cheat the taxman out of his/her money it will lead to nothing good.
There are few good reasons for filing your taxes on time, especially if you happen to owe money. If you are to receive a refund then the deadline to file means nothing to you other than the fact that it will speed up the return of your money a little bit by filing on time. If, however, you actually owe the government money, because you are self-employed or your employer did not remit the proper taxes on your behalf, than the deadline is of great importance to you.
If you file your taxes late and you owe money than the clock starts ticking and the interest begins to accrue the minute the deadline passes. In addition to the amount owed the daily compound interest will also begin to accrue. What this means is that you will essentially have to pay interest on the interest.
Interest rates charged by the CRA are currently five percent but the CRA reserves the right to change the rate every three months so it is really in the best interest (no pun intended) in filing on time and remitting any outstanding amount at the earliest opportunity.
The filing of back taxes is also a serious issue if you owe money as you are also subject to late filing penalties. Once again, if you are owed money on your back taxes then you have nothing to worry about other than the fact that your money is earning you nothing as the CRA is not mandated to pay you interest on monies owed from back taxes as the onus is on you to file at the correct time.
If you owe money however, then the story changes. Any monies that are owed are subject to interest charges as well as late filing penalties which can be as high as 50% if you were charged a late-filing penalty previously. The final analysis is quite clear, the best way to avoid issues is to file your taxes on time and to pay off any balance owing at the earliest possible opportunity. Another very big mistake is deciding to file a return based on knowingly incorrect information. In other words, deciding to not report certain income on your taxes. This never ends well.
If you are audited, and if the CRA suspects any improprieties you will be, than the amount of money you may face in penalties and interest will be substantial and you may also face other sanctions. The same holds true for claiming benefits that you are clearly not entitled to. The CRA will almost certainly realize the mistake at some point and you will face penalties.
There are however programs that apply to individuals who accidentally claim benefits that they are not entitled to to come clean without penalties. Having an accountant assist you in the filing of your taxes will save you time, money and potential future headaches.