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Is it possible to file my tax return after the deadline has passed?
If you missed the deadline, it's still recommended to file your tax return as soon as possible to minimize any penalties and interest charges. If you're uncertain about your specific situation and whether you're expecting a return or owe money to the CRA, contact Versa for a free consultation. If you're expecting a refund and still haven't filed, there are no penalties or interest charges. The following are potential consequences of filing your return late:
- Late Filing Penalty - If you owe taxes and file your tax return late, the CRA may charge you a late filing penalty. The penalty is generally 5% of the balance owing plus an additional 1% for each month the return is late, up to a maximum of 12 months.
- Interest Charges - If you owe taxes and file your tax return late, the CRA will also charge compound daily interest on the outstanding amount. The interest starts accumulating on the day after the filing deadline.
- Refund Delay - Filing your return late may result in a delay in receiving any refund you are entitled to. The CRA processes returns in the order they are received, so filing late may push back the processing time.
Late Filing Penalties
If you have an outstanding tax balance and fail to file your taxes on time, the CRA imposes late-filing penalties. The penalties charged are 5% of the amount owed plus an additional 1% interest for every full month your return is overdue, up to a maximum of 12 months.
Example:
Suppose you file your taxes six months after the deadline and already owe $3,000 in tax debt. In this scenario, you would be subject to late-filing penalties and interest from the CRA.
- Late Filing Penalty: 5% of $3,000 = $150
- 1% for each month you file late: 6% of $3,000 = $180
- Total late filing penalty/interest = $330
Therefore, the total amount owed, including penalties and interest, would be $3,000 (original tax debt) + $330 (penalties and interest) = $3,330.
Waiving penalties and interest
If you are faced with the need to file your taxes late and end up owing money to the CRA, there is a possibility to request the waiver of both penalties and interest. To do so, the late tax filer should complete Form RC4288 and submit to the CRA. It's important to note that this form can only be used for one of the previous ten tax years.
To be eligible for the waiver, the circumstances surrounding the late filing must have been beyond your control. You can either provide your own explanation for filing late or select one of CRA's predefined options such as CRA error or delay, medical emergency, mental distress, natural disasters, and others.
We encourage you to take advantage of this opportunity by submitting Form RC4288 to the CRA. Please feel free to reach out to our team if you require any assistance or further guidance throughout this process.
Instalments Payments
Taxpayers who owe money to the CRA based on their 2022 tax return have the option to pay in instalments. The CRA provides various payment plans/options depending on a taxpayers situation.
Self-employed taxpayers
For self-employed individuals in Canada, the deadline to file your income tax return is different from the deadline for most individuals. The filing deadline for self-employed individuals is June 15th of the following year (2022 tax returns are due on June 15th, 2023).
It's important to note that although the deadline for self-employed individuals is June 15th, any balance owing is still due on or before May 1st, 2023 to avoid any interest charges. This means that if you owe taxes as a self-employed individual, you should pay the amount owing by May 1st to avoid any interest charges on the unpaid balance.
