Don't Delay - File Your
Tax Return Today!
Tax
time is upon us. The filing deadline for 2001 is April 30, 2002.
It is extremely important to file your tax return on time, even
if you know you have taxes to pay and can't afford to pay them.
If you file late, you will be charged 5% of the balance owing
just for being late. So, if you owe $1000, that's a $50 penalty
right up front. If you delay for several months, you will be charged
1% of the balance for every full month you are late. So, if you
wait a year to file, that's more than 12% or $120 per $1000. And
if you've filed late anytime within the last three years, the
penalties are doubled! So that's 10% up front plus 2% per month
for each full month to a maximum of 20 months worth of penalties,
or 50% of amount owing, whichever is less.
If you can't pay the entire amount owing immediately, you will
be assessed monthly interest charges. The current rate is 6% per
annum, but the rate is reviewed every quarter. You must pay the
accrued interest from the date you should have filed your return,
not from the date you actually filed it. So there's absolutely
no benefit in delaying filing your return. You'll just add to
the problem by having to pay the late filing fees listed above.
If you filed late because of circumstances beyond your control,
write to Canada Customs and Revenue (CCRA), explain why, and they
might forgive the interest owing.
You can make a payment arrangement
If you cannot pay your balance owing in full when filing your
2001 return, call the Revenue Collections Section to make a mutually
acceptable payment arrangement. The phone number is listed below.
They will charge daily compound interest from May 1, 2002, until
your account balance is paid in full, but you will avoid the late-filing
penalties if you file your return on or before April 30th, 2002.
As long as you contact them and arrange for payment, CCRA will
not hound you. It's when you ignore them that problems arise.
CCRA can and will garnishee your wages if you ignore their requests
for payment. If you know you can't pay your back taxes, your SISIP
financial counsellor can assist you in coming up with a plan to
pay off your taxes. You might qualify for a CFPAF loan so you'll
pay less interest on the amount you owe.
You can get your money working for you
Of course, if you are expecting a tax refund, you should file
your return as soon as possible so you can get your money working
for you. You won't face any late filing fees if the government
owes you a refund, but you won't be able to use your money for
other things, either. The government might pay you interest on
refunds, but only if it takes them more than 46 days to process
your return. If you've got debts you're planning to repay with
your refund, you're losing the amount of interest you're paying
to your creditor every day you delay filing your income tax return
- that could be as high as 36% annually depending on who you owe
money to!
You must file a return to receive the Child Tax
Benefits or GST rebates
If you have children, you will not receive the Child Tax Benefits
or GST rebates you may be entitled to until you file your return.
Since these payments are income dependent, you must file a tax
return in order to receive the benefit. If you're in a low or
medium income range, you'll be missing out until you get around
to filing your return.
Did you know that the most common error made on income tax returns
is simple mathematical error? So check and double-check those
figures before filing your return!
For more information, check out the CCRA website at www.ccra-adrc.gc.ca
or call 1-800-969-2221 for forms and publications, or 1-800-959-8281
for individual income tax enquiries.
Written by Janet Scotland
Financial Counsellor
SISIP Financial Services, Comox, BC
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