Do you know how far back can you file taxes in Canada?
According to the CRA, taxpayers can file back their tax returns as far as ten years. However, you have to pay a 5% penalty for late filing and 1% interest on your total per month. So, the longer you go without filing, the higher the penalties will be. In this article, I’m going to explain this fact elaborately.
So let’s check it out.
8 Reasons for Not to File Taxes on Time
You know CRA is very strict in terms of tax calculation. If you are eligible to pay the tax, you have to do it no matter what. So, do married couples have to file taxes together in Canada?
As a couple, you don’t file your taxes together. But the combined information on your tax return will help you decrease your taxes or increase the refund.
Anyway, even with the strict law, some people still refuse to pay the taxes on time. The reasons are as below.
They Don’t Afford to Pay The Taxes
Sometimes people wait until they can afford to pay the full tax. It happens when the balance is too high. However, it’s better to file the taxes anyway. You can save from late-filing penalties by submitting the tax return even without paying the money.
On the other hand, if you can’t afford to pay your balance in full, you might come to an arrangement with the CRA or Revenu Quebec.
Your Records or Receipts Are Not Ready Yet
It’s possible to lose your records, bank statements that you need to file your tax. And people usually start procrastinating in this case.
Another thing that can happen, you have no knowledge or records of income or expenses. At that time, you can hire a CPA or accountant for you. You can also go for a tax preparation company. You know, tax preparers are willing to work overtime during tax season.
Believe That It’s Okay to Not To File
Though it’s not right, some people still think that they will not be found out if they don’t file their taxes. It’s actually extremely foolish as well as risky for the future.
Stress and Worry About Late Tax Process
Unfortunately, some people find that the late tax filing is so stressful that they want to avoid it. Also, think that it will eventually go away by itself.
Consequence of Let Filing or Not Filing of Taxes
You will face two different situations based on if you don’t file your taxes or if you file your taxes late.
What Happens If You Don’t File Your Taxes?
Owing a text debt is not a crime, but not filing taxes when required is a crime. You might plead guilty to tax evasion.
Tax evasion is a situation where a business or individual purposely ignores Canadian tax law. You will face different kinds of penalties for this conviction, including fines, prison time, or even getting a criminal record.
As I told earlier, some people delusionally believe the CRA can’t find out their assessment. But that’s not true. CRA is a very powerful organization. Moreover, it also has a very wide network. Perhaps, they will not contact you immediately, but they will make sure to collect what they own when they do.
Simply to say, it’s better to file your returns when they are due than not doing anything at all.
What If You Are Late?
Most taxpayers have to file their returns on 30th April of each year. The deadline is 15th June for Self-employed individuals. But in case they have a balance owing, they can pay it by 30th April. At that time, no interest will be charged.
If you somehow fail to file your taxes within the deadline, the CRA will immediately charge a penalty on 1st May. You also have to pay daily interest on your late payments.
Well, now let’s see how you can file late tax returns in Canada.
Filing multiple year tax return
Once you are behind filing your returns, you can’t simply walk into your nearest income tax chain with your return collection. You should deal with professionals who can negotiate with the CRA.
Besides, there is a program called Voluntary Disclosure Program (VDP), which CRA designs to give people a second chance. If you have an appropriate explanation, you can send an application to them. If it’s accepted to the VDP, you might be able to save yourself from prosecution and even reduce the penalties.
By the time you definitely get, how far back can you file taxes in Canada. Although you will get a long time, it’s highly unrecommended to go that far. So, pay your taxes on time and be a good citizen.