Month: May 2016

When is my Tax Return Due?

 

With the exception for self-employed individuals and their spouses, Personal income tax returns and the tax owing are normally due by April 30th.  Penalties and interest may be charged for late returns or late payments.

This year however, the due date is extended to Monday, May 1, 2017 because April 30, 2017 is a Sunday. Individual taxpayers can apply this rule to other CRA deadlines. According to the CRA information on Important Dates for Individuals “When a due date falls on a Saturday, a Sunday, or a public holiday, we consider your payment to be paid on time or your return to be filed on time, if we receive it or if it is postmarked on the next business day.”

It’s important to stress that this rule applies only to individual taxpayer and does not apply to the remittance of an deduction and amounts withheld (for example payroll taxes, CPP, EI or GST/HST remittances), or payable by a corporation.  The CRA deems these amounts to have been made on the date the CRA receives them. For more information see section 248(7) of the income tax act.

 

The Canada Revenue Agency (CRA) may allow a grace period for taxpayers who are experiencing delays in submitting their return online.  The amounts owed to the CRA are still due by the April 30th (or May 1st for this year) to avoid any penalties.

The deadline for Self-employed individuals is Thursday, June 15, 2017 to file their 2016 personal tax returns, but if the self-employed taxpayer owes an amount, the balance must still be paid by May 1st.

Remember the CRA applies a late-filing penalty and interest so even if you can’t afford to pay by the deadline, you can avoid late-filing penalties which may be as high as 34%. See my penalties article for more details.

CRA Penalties and interest

Let’s get the simple stuff out of the way first:

  • Your tax return is considered late if it is not received by the due date and a penalty applies
  • If you don’t owe or are owed a refund there is no penalty
  • Penalties are fixed and apply to returns that are late; interest is variable and depends on how long the owing amount was outstanding

Late-filing penalty

If a taxpayer owes tax for 2016 and does not file a return by May 1, 2017, the CRA will charge a late-filing penalty. The penalty is 5% of your 2016 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months (i.e. as high as 13%)

 

If a taxpayer is charged a late-filing penalty on their return for 2013, 2014, or 2015 their late-filing penalty for 2016 may be 10% of their 2016 balance owing, plus 2% of their 2016 balance owing for each full month your return is late, to a maximum of 20 months (i.e. as high as 50%).

Conclusion:

  • Always try to file and pay by the deadline
  • Even if you can’t pay on the deadline, file your return by the deadline
  • If you can’t afford to pay the entire amount owing you or you representative call CRA’s debt management call centre at 1-888-863-8657 from 7 a.m. to 11 p.m., Eastern time.

 
CRA prescribed rates can be found here