Why filing your taxes last minute in Canada could be risky this year
With just a few days left before the tax filing deadline, many Canadians are still waiting until the last minute to submit.
This tax year comes with new challenges, and experts say it is all the more crucial to file as early as possible.
When is the tax filing and payment deadline?
The deadline this year for most individuals to file their returns is April 30 by the end of the day, in addition to paying any taxes owed.
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Although the deadline to file for self-employed Canadians and their spouses or common-law partners is June 15th, they still must pay taxes owed by April 30.
'The important thing is to file your tax return on time so that you're not considered a late filer,' says chartered professional accountant and GoFile software owner Daniel Toma.
'The penalty for filing late is substantial, and interest is incurred at CRA's prescribed rate on a daily basis.'
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What are the risks of waiting too long to file?
The Canada Revenue Agency updated its online systems earlier this year to improve the way electronic documents are processed, but unfortunately there are still some bugs in the system.
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Tax filers who may be kicking the can down the road until the deadline could be in for a surprise due to these technical issues, and in some cases could mean the process will take longer than expected.
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Toma says that even with these issues, taxpayers will still be responsible for filing on time.
'The CRA's position is that you should be able to get copies of any slips separately from your CRA account.'
If you run into issues uploading electronic documents to the CRA, you might need extra time to submit each document manually. Toma says 'the CRA wants you to do your best to include everything from the tax slips that you've seen and insert them manually into your tax return, which you can do.'
Preparing your tax return in advance will also provide the insurance of extra time to adapt should there be any surprises. For example, in some cases, electronic documents might arrive just a few days before the deadline, as Toma describes.
'My staff finished a tax return yesterday for me to review, and then told me just today to wait because they downloaded more slips,' he says.
'So there are slips showing up today on April 25 that were not there yesterday.'
If you are waiting to get all slips before calculating your taxes and are up against the deadline, Toma says an option is to send the CRA an overpayment that can be credited back after the fact.
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'If somebody is very concerned about having not included additional income that they think they've missed, they could always pay additional to the CRA account as insurance. Again, this would be a precautionary measure.'
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Filing taxes can also come with the benefit of potentially getting a partial refund, so there is an extra incentive to file on time.
A refund can be put to paying down expenses, and new polling shows younger Canadians plan on using the funds for investing.
So, it's important to file on time to ensure the money owed to those taxpayers isn't replaced with penalties.
'More than half of filers will have a refund,' says Toma. 'Filing is often in your financial interest, not only for compliance, but you will be getting back some money.'
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