A reader writes: "I haven't filed my income tax for several years. What are the repercussions I can face if I file them this year?"The late-filing penalties can make this a costly mistake. As you see, the standard late-filing penalty is 5% of the balance owing and an additional 1% of the balance owing for each full month that your return is late, to a maximum of 12 months - but if you haven't filed for several years, the penalty for filing your Canadian income tax late could even be higher.
You may be able to decrease the penalties by using the Canada Revenue Agency's Voluntary Disclosures Program; this program "allows taxpayers to come forward and correct inaccurate or incomplete information or to disclose information they have not reported during previous dealings with the CRA, without penalty or prosecution" (CRA).
Another thing you can do is to hire a tax lawyer to mediate with the Canada Revenue Agency if you can afford it.
My advice to anyone who has missed a filing deadline for their Canadian income tax; you definitely need to file your taxes on time this year and get your past tax situation sorted out because the longer you put it off, the more expensive it will get.
More on Canadian Income Tax
- Preparing & Filing Your Canadian Income Tax Return
- Your First Business Income Tax Return
- Canadian Income Tax FAQs for Small Businesses
- Top Canadian Tax Software