Typical CRA Tax Penalties:
- Late-filing penalty (Individuals and Corporations)
- Repeated failure to report income penalty
- False statements or omissions penalty
- Etc.
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Late-filing penalty (Individuals and Corporations)
If you or your corporation owe tax and do not file your return for the first year on time, CRA will charge you a late-filing penalty. The penalty is 5% of the first year balance owing, plus 1% of your balance owing for each month that your return is late, to a maximum of 12 months. Or a maximum of 17% of tax owing for the first time offender on late filing.
If you file late for the second time within previous three years, your late filing penalties increased drastically to a maximum 50% of tax owing. For example, if CRA charged a late-filing penalty for any of 2010, 2011, or 2012, your late-filing penalty for 2013 may be 10% of your 2013 balance owing, plus 2% of your 2013 balance owing for each month that your return is late, to a maximum of 20 months.
Repeated failure to report income penalty
If you forget to report an income amount on your return for one year and you also failed to report an amount on your return for any of previous three years, you may have to pay a federal and provincial/territorial repeated failure to report income penalty.
The federal and provincial/territorial penalties are each 10% of the amount that you failed to report on your return for 2010. That is a penalty of up to 20% for not reporting income the second time no matter intentional or not.
False statements or omissions penalty
You may have to pay a penalty if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your tax return.
The penalty could be as much as 50% of the understatement of tax and/or the overstatement of credits related to the false statement or omission.
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Interests
If you have a balance owing for the first year, CRA charge compound daily interest starting May 1st the second year, on any unpaid amounts owing for the first year. This includes any balance owing if CRA reassess your return. In addition, CRA will charge you interest on the penalties starting the day after your return is due. The rate of interest CRA charge can change every three months.
If you have amounts owing from previous years, CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
As most people know problems do not go away on their own when it comes to tax crisis. Not acting quickly can end up big penalties and interest costs that can start snowballing out of control.
Many people have had to declare bankruptcy or take other drastic financial action because they let the tax crisis get out of hand trying to solve it by themselves without the proper knowledge and wherewithal about dealing with the CRA. We strongly recommend you to trust Tax SOS with all your tax related problems, as we are an experienced tax firm with tremendous experience in this arena. We can help you reduce or remove penalties and unnecessary interest charges by the CRA. Call us at (877) 982-9767 or complete the Contact Form for a FREE NO OBLIGATION consultation right now!
Pay sooner, or pay much more later
Obviously it makes sense to avoid the whole issue of penalties and interest costs altogether by ensuring that you file your returns properly and paying your taxes on time. If you have unfiled tax issues or tax owing, then you will be at the mercy of the tax system that certainly does not make a point of giving the little guy a break. There are reports of many people who have experienced financial hardships due to increasing interest costs for their tax owing, as well as the penalties for not doing things on the CRA’s schedule.
Having the right knowledge for your situation
If you find yourself in serious tax crisis, it is never too late to free yourself, as long as you know the smartest way to go about it. The internet can be very valuable here in terms of guiding you in the right direction and perhaps helping you find a tax firm that is professional and experienced who can be of service in your case, helping you to avoid any more damage around penalties and interest charges.
A strong tax problem solver may be helpful
Try doing keyword searches of various topics like ‘’unpaid taxes, interest and penalties, tax problems, etc.’’ and see what comes up. Look into the matter for yourself in order to decide what is right for you, and see what others are saying about various services as well. Many people do not educate themselves and pay the price later, in addition to the financial price they have to pay for not understanding their tax situation right from the start.
Competent and skilled tax service professionals can help you to better understand your tax situation and help to resolve issues around penalties and interest charges related to your tax issues before things get really out of control.
Some people will suggest that you have to take more drastic action, so it’s important to know what is right for your own situation. Since taxes are complicated and stressful enough as it is, it can be useful to look into very experienced tax professionals who can help you through an issue that can be less painful than some may realize. CONTACT TAX SOS RIGHT NOW at (877) 982-9767 or (416)623-9234 or complete the Contact Form.
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We offer first time consultation absolutely FREE. the consultation is just to help you to understand the scope of your tax problems. We will also provide you with the recommended steps to quickly fix your tax problems. It is free and you do not need to feel the obligation to work with us at the end if it does not click.
What is more, if you do work with us at the end, we want you to understand that we guarantee our rates to be competitive in the entire tax resolution industry.
Penalties and interests won’t go away on their own unless you act. In fact, the faster you do something, the sooner you will stop the daily compounding interests. So act TODAY! Get Tax Help TODAY by calling Tax SOS team at 416-623-9234 or 877-982-9767 or go to Contact page.
