What should you do if you can’t pay your taxes?
If you find yourself in a position where you think you won’t be able to pay the taxes you owe on time, don’t hold off on filing. Purposely not filing your taxes on time is a common mistake many people with lack of cash flow make. While it’s true that not filing will likely buy you some time before CRA collections becomes involved, this decision is very costly in the long-run.
The misconception some late filers have about their situation is that the same charges are applicable when you pay your taxes late; regardless of whether you file your taxes on time or not. This assumption is incorrect. The CRA late filing penalty is applicable if you don’t file your taxes by the return due date. The CRA charges interest separately based on the unpaid account balance owing. For late filers interest is calculated on both the taxes and penalties assessed. If you file on time but owe you will only be assessed interest charges.
If you are in a situation where you deliberately held off filing for the above reason, email us through our contact form http://www.completeaccounting.ca/contact/ or call us today at 778-298-2415 to find out your best course of action. In some instances a taxpayer may be eligible for the Taxpayer Relief provisions for penalties and/or interest. Alternatively, the Voluntary Disclosure Program may be applicable. Both have the potential to avoid penalties.
Solomon Nordine is the owner and president of Complete Accounting Solutions. Mr. Nordine is a Fellow Public Business Accountant (FPBA) and a United States Accountant.