Why you should file your taxes and make payments on time?

canadian dollar, concept of tax

Why you should file your taxes and make payments on time?

The obvious answer to this question is that it will save you money and headaches down the road. Potential clients have told me that their main reason for not filing their tax returns was that they were scared that they were going to make an error. That is where hiring an accountant or a tax professional would make a lot of sense.

There are late filing penalties and have not paid a sufficient amount on time. Eventually, you will receive letters requesting to file and you really should not ignore them as there are consequences. In extreme cases where returns have not been filed for years it can be viewed as tax evasion and lead to prison.

The other common reason that I have heard is they were not sure if they would have the money to cover the potential taxes owing. If you end up in a situation where you owe significant money there are a couple ways to address this issue. First, a payment plan could potentially be arranged with CRA over 6 months. Second, a loan from a bank or credit union could be used. Interest expense from one of these loans if related to a small business would be deductible while interest paid to CRA is not deductible. If you don’t pay your balance owing they can garnish you, freeze your bank account and even seize assets such as your home to make the payment.

Want to know more?

Shawn Oldridge