of Canada Revenue Agency It urges Canadians to file their taxes on time and warns those who do not will have to pay more fines and interest.
With the tax season starting last week and this year’s April 30 deadline falling on a Sunday, taxpayers have until May 1, 2023 to file. This same date is the due date for payment if the money is outstanding.
For those who tend to procrastinate, here’s what you need to know about interest and penalties for not filing and paying your taxes on time.
interest payment
The Canada Revenue Agency (CRA) says that if you’re behind on your taxes, you may be charged interest for late payments. If you have an outstanding balance and are late filing your taxes, you will also be charged a late filing penalty.
Compounding per day will begin immediately (May 1st) and interest rates may change every calendar quarter or every three months.
According to the CRA, the interest rate on the taxpayer’s current or previous balance will be 8% of the late payment tax based on the current prescribed interest rate.
How much that interest costs varies. For example, the interest rate on delinquent taxes, Canada Pension Plan contributions and employment insurance premiums in the first quarter of this year was 8%, up 1% from the third quarter.
Based on the first quarter of this year, the corporate taxpayer overpayment interest rate is 4% and the non-corporate taxpayer overpayment interest rate is 6%.
CRAs are interest rate The interest rate used to calculate taxable benefits from interest-free and low-interest loans for employees and shareholders for the first quarter ending March 31 is 4%. Also, the interest rate on related loans or debts for corporate taxpayers is 8%.
The agency has not posted forecasts for the second calendar quarter.
For those who choose to repay what they owe in installments, the CRA requires that those payments be made on time. Interest on installments.
late penalty
According to the CRA, the penalty for filing a tax return after due date if there is an outstanding balance is 5% of the outstanding balance for 2022, plus an additional 1% for each month after due and before filing. increase. Up to 12 months.
The CRA says even those who are unable to pay the outstanding amount should still file their taxes on time to avoid this late filing penalty.
As an example of how these costs add up, a taxpayer who was charged late filing penalties in previous years faces a penalty of 10% of the outstanding balance this season, plus a penalty of 2%. If you do, it says: Every month after the payment deadline, up to 20 months until the tax return.
For those who pay with payment in installments Late fees will apply, but only if the interest on the installments exceeds $1,000.
According to the CRA, it is possible to request revocation or waiver of these penalties in “compelling circumstances,” but this request can only be made within 10 years. If granted, this cancellation will not apply to older obligations.
Coverage for this article was paid for through The Afghan Journalists in Residence Project funded by Meta.
