You didn’t file your tax return because you were sure that you didn’t owe money to the CRA?
You did file but were surprised by the total amount due?
You just can’t afford to pay and don’t know what to do?
Well first things first. File you tax return. Preferably before the tax deadline. You don’t need to add late filing penalties and interest on top of what you owe in taxes. For a first offender the CRA will ding you a 5% penalty and 1% each month in interest. Second time offenders (late filing for any of the 3 previous years) are looking at double those figures (10% and 2%) to a maximum of 20 months. Historically, those who are late once are often late again. This is a bad trend for your finances since you are parting with your cash in favour of the taxman.
In the end the CRA may just file a return for you with the information that they have in their system – any T slip that was filed against your SIN will be income (and if you have other income types in the past, that will be estimated, usually not in your favour) and you are likely to receive only the minimal deductions. You are far better off taking matters into your own hands and getting the job done. If you cannot stomach the task seek out a tax professional such as Softron Tax.
Back to the matter at hand. Taxes owing are due immediately. But you can contact the CRA seeking an accommodation of a payment schedule. The CRA may agree to that if you can show that you have tried other reasonable ways to obtain funds, including getting a loan. You will be required to disclose your income, living expenses, assets and liabilities. Do your monthly budget and have it ready for your discussion. Call a CRA agent (1-888-863-8657) and discuss making income tax payment arrangements.
If your case is extreme, you may need to take farther reaching action. A creditor’s arrangement or even bankruptcy may be necessary.
The consequences of ignoring the situation is increasing interest charges, more demand payment letters and possibly wage garnishing or even having assets frozen.
Luckily debtor’s prison no longer exists. Isn’t it better to avoid all of these eventualities and just deal with the issue head on and make that phone call?
If you have used the services of Softron Tax then you have an ally who will assist you in making the correct choice, as should any tax preparer that you have had prepare your return.