Filing your return and paying your taxes on time is crucial, the CRA reminds us. If a refund is due, it’s better to get it sooner than later, and filing early helps to avoid possible interest and penalty charges.
Filing and paying on time means that benefits and credit payments, such as the goods and GST/HST credit and the Canada child tax benefit won’t be delayed. In addition, if a client owes money, they won’t be charged a late-filing penalty or interest.
If tax for is owed for 2011 and clients don’t file their return on time, the CRA will charge a late-filing penalty of 5% of the 2011 balance owing, plus 1% of the balance owing for each full month that a return is late, to a maximum of 12 months.
The penalty is higher if you are a repeat late filer.
If a balance is owing for 2011, the CRA also charges compound daily interest starting May 1, 2012 on any unpaid amounts, so even if clients can’t pay all of their taxes owing right away, they should still file returns on time and pay what they can.
File online, pay online
It’s quick, easy, and secure to file and pay online. Programs such as Netfile, TurboTax and UFile can be used to file returns online, and Telefile can also be used to file returns by phone.
CRA’s My Payment lets clients make one or more payments in one simple online transaction, and they can use this service if they have access to online banking at a participating financial institution.
They can also make payments using their financial institution’s telephone or Internet banking services. Tax filers can also sign up for direct deposit to receive their refund in their bank account, which eliminates the waiting period for cheques.
Regardless of the filing method chosen, all your records must be kept for at least six years after the end of the tax year to support your claims, in case the CRA reviews returns.