April 30 is near, meaning the deadline to file and pay your taxes in Canada is almost up.
If you fail to file your taxes on time and owe a balance, you could face some steep penalties.
Here’s what to expect if you file your taxes past the April 30 deadline.
You’ll be charged interest
If you owe a balance on your 2023 tax return and can’t pay it by April 30, you will be charged compound daily interest starting on May 1, notes the CRA.
If you need to pay tax instalments, you must pay them by the due dates outlined by the CRA, or you could be charged instalment interest.
Penalties for filing late
If you file your tax return after the due date and have a balance owing, you’ll be charged a late filing penalty.
Those who file their tax return after the due date and have an owing balance will be charged a late filing penalty of 5%.
An additional 1% will be charged for each full month that you file after the due date, to a maximum of 12 months.
Your late filing 2023 penalty will be 10% of your balance owing if you were charged for a late filing penalty in 2020, 2021, or 2022 and requested a formal demand of return.
The CRA will charge an additional 2% for each month you file after the due date, up to a maximum of 20 months.
The CRA notes that even if you can’t pay your balance owing, you should still file your taxes on time to avoid being charged the late filing penalty.
Missing out on benefits
If you file your taxes late and owe money it may also impact the benefits you receive.
According to TurboTax, some benefits that could be affected include the GST/HST credit, the Canada Child Benefit (CCB) and old age security benefits.
Those who file late without any amounts owing can still qualify for tax refunds, receive a Notice of Assessment (needed to apply for a mortgage or loan), and will be able to create more contribution room for their RRSP, noted Turbotax.
Those unable to meet their tax obligations due to circumstances out of their control can make a request to the CRA to cancel or waive penalties. The agency can only grant relief within 10 years of your request date.
If you’re trying to file your taxes before tomorrow’s deadline, Daily Hive has some helpful guides (here and here) to make the process as smooth as possible.
Good luck!