Based in Toronto, CA, Stuart Bollefer is an experienced tax lawyer providing clients with a range of tax planning services. Stuart Bollefer joined Aird and Berlis, LLP, in 2000 and continues to support the firm as a senior tax partner and chair of the wealth management and succession planning group.
Filing taxes can be overwhelming. It is a long, complicated process, and it is not unusual for individuals to mistake or two. Others may be living with a far graver issue: failing to file taxes at all. If a Canadian has not filed their taxes for the year or has a history of not filing, there are a few steps they can take to remedy the situation and mitigate potential consequences. Individuals who willfully ignore filing and paying taxes will be targeted by the Canadian Revenue Agency (CRA). The CRA has numerous systems in place to catch individuals who fail to file taxes. They will not only demand the requisite amount be paid in full, but also assess a 5 percent late fee and charge additional interest for every month the debt remains unpaid.
The interest can be substantial since it compounds on a daily basis and is equal to 4% plus a prescribed rate that can change up or down based on prevailing interest rates. In addition, failing to fail tax returns can be lead to additional civil penalties and even more serious charges based on tax evasion. The consequences range from significant fines to incarceration for serious offences.
In order to avoid these and other penalties, individuals should file their taxes as soon as possible. This means sending in properly filled out tax forms (even if the individual filing cannot pay their taxes) and filing for missed taxes in past years. If a person is transparent about their financial situation and works within the time frame allotted by the CRA, it may be possible to work out a more tenable payment plan.
