Tax Season has Come to an End

Tax season 2021 has come to an end, so what happens if you were not able to file on time?

Calgary Padgett Tax Services

April 30 was still the cutoff for turning in your individual income tax return and paying any taxes owed. As usual, if you are self-employed, you and your spouse or common-law partner have until June 15 to hand your tax paperwork over to the Canada Revenue Agency. But any tax owing was still due April 30th.

Filing late can cause delays in receiving your Canada Child Benefit (CCB) as well as any income supports that you may have applied for. Even if you do not owe any taxes, you must file a tax return to access any tax credits and benefits you might be entitled to, such as the GST/HST tax credit, the CCB, as well as the Old Age Security pension and the Guaranteed Income Supplement.

If you are late turning in your 2020 tax return and owe taxes, the CRA will charge you a late-filing penalty that is five per cent of your 2020 tax balance, plus another one per cent of your balance for each month your return is late, to a maximum of 12 months. On top of that, the tax agency will charge compound daily interest on your unpaid 2020 taxes, also starting May 1, 2021.

The good news is the CRA said it will not be charging interest on 2020 taxes owing if your taxable income is $75,000 or less and you received one or more COVID-19 benefits in 2020. The interest relief will be in place until April 30, 2022, the tax agency said.

If you do not qualify for interest relief and cannot pay your tax bill in full by April 30, the CRA expects you to put in your best effort to find the funds to pay the government, including by borrowing the money. If you must borrow, the ideal course of action would be borrowing from a low-interest loan or line of credit to pay off your tax bill and then setting up a payment plan for yourself to extinguish your debt as soon as possible.

Still, the CRA may cancel or waive any interest or penalties if you cannot meet your tax obligations due to circumstances outside of your control.