Canadian Taxation 101: Knowing How to Avoid Common Tax Penalties
The tax compliance turnout in Canada has always been satisfactory. In fact, reports from the international accounting firm PwC shows that the country ranked ninth in tax payment ease among 157 countries worldwide. But even so, there are still some individuals who have failed to settle their tax obligations on time. And because they have overlooked this important initiative in tax compliance, penalties shall be imposed on their current tax bill. Here’s a basic rundown of the current tax penalties in the country:
1. Failure to file
The Canada Revenue Agency has a set schedule for the filing and payment of GST/HST returns. if you failed to comply with the deadline, you will be charged with a tax penalty. The only two instances when filing late or failing to file is allowed by the CRA is when there is no amount of tax owed or if the tax office owes you a refund.
2. Failure to respond to a ‘demand to file’
Even as the tax office sets a deadline for filing and paying GST/HST tax returns, they will still give you enough time to catch up on your taxes. This is the time when they would send you a ‘demand to file’ request. However, if you still fail to respond to this request, the CRA will impose a $250 tax penalty on your next tax bill.
3. Failure to file electronically
Some businesses are required, or have agreed, to file and pay their GST/HST returns electronically. According to the rules set by the CRA, if you are among these businesses, filing manually would merit a corresponding tax penalty.
4. Failure to report data correctly
Putting incorrect or inaccurate information when you file and pay your GSt/HST returns results to a corresponding tax penalty. Incorrect information could be important data that should have been included but was intentionally left blank. Meanwhile, incorrect information could be an amount that was reported with the wrong figures.
Seeing to your tax obligations is not just about filing and making payments on time. Rather, it also involves your sincere efforts to include updated and accurate information on your GST/HST returns. otherwise, you will face tax penalty charges from the CRA.
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