Tax season can be stressful, but you never want to bypass that stress by not filing your taxes! There are penalties and consequences for not filing your taxes on time and accurately. Every person and business needs to file their taxes annually. Depending on various factors there are different dates each person and business must file their taxes. Generally, taxes must be submitted by April 30th, each year, at the latest. There are a few exceptions, one of which being that those who are self-employed and their spouses have an extension and can file their taxes on June 15th. Regardless of when you need to file your taxes, you still must file your taxes.
Failure to File on Time
If you do not file a tax return, you will be assessed a penalty of 5% for the amount that you owe. This is in addition to a 1% fee of the unpaid taxes that you owe each month that it is late, up to a maximum of 12 months. You are also charged a compound daily interest for any taxes that are left owing. This, however, is only if you fail to file your taxes but are not trying to evade taxes or be fraudulent. It is merely a penalty for those who do not file on time.
Tax Evasion and Fraud
If you fail to file your taxes on time or were confused regarding the filing of taxes, then there is leniency given. If you are trying to evade paying your taxes or are committing tax fraud, then you are not afforded this leniency. Tax evasion is when a business owner or an individual knowingly and purposely ignore tax laws in an attempt to avoid paying taxes. The two main ways that people attempt to evade taxes is through underreporting their income or overstating their deductions to try and minimize the amount of tax that they should be paying to the Canada Revenue Agency.
If you have been convicted of tax evasion or fraud, then the consequences are quite strict. You can face the criminal penalties of jail time, though this is not common, and fines up to 200% of the amount that you were trying to avoid paying.
To avoid such issues, a professional tax consultant team can help. They can ensure that you are fulfilling all of your tax obligations while also helping you take advantage of all tax loopholes that are legal and can legitimately save you money on your taxes.
Sometimes people make mistakes when filing their taxes, and new business owners may not realize that they have to pay taxes and can forget. That is why there is a voluntary disclosure program created by the CRA. While not avoiding all consequences, it can help you avoid the severe repercussions you would be susceptible to.
If you make a mistake on your tax return, don’t file, or fail to declare your earnings correctly then you can voluntarily disclose these mistakes to avoid interest, prosecution, and other penalties.
You can only benefit from this program if you meet the following guidelines:
● You must disclose this information voluntarily
● You cannot have been asked for information about your taxes by the CRA before you voluntarily disclose
● The disclosure must be complete
● The filing must be over a year old
Taxes can be tricky, and having a tax accountant for your tax planning is a great way to make sure that you do not end up owing the CRA. If you are looking for a tax accountant in Etobicoke or Toronto, then contact S&W CPAS LLP. Our professional and knowledgeable staff are here to guide you through your taxes and help you save.