What Happens If I Don’t File My Taxes in Canada?

Taxes are one of life’s certainties, as the saying goes. However, tax season in Canada can feel like a whirlwind of paperwork and deadlines.
What if you miss the deadline or don’t file your taxes? Furthermore, what happens if you decide to dodge your tax obligations in the Great White North?
Canada’s tax system isn’t one to be trifled with, and failing to file your taxes can unleash a snowstorm of consequences.
The repercussions are as accurate as a winter’s blast, from penalties that can frost over your bank account to potential legal chills.
Let’s discuss how ignoring your tax obligations can impact your financial well-being and legal status.
Why File Taxes?
Before getting into the repercussions, let’s briefly discuss why filing taxes in Canada is critical:
Penalties for Late Filing
In most cases, the penalty for not filing is less than you owe. If you owe money, the CRA will charge you compound daily interest at prescribed rates on top of the late filing penalty.
Here’s what you need to know:
If you prove that circumstances beyond your control prevented you from meeting your obligations, the CRA may cancel or waive these penalties and interest. However, this is only possible within ten years. You can make this request through a written submission to the CRA.
Penalties for Late Filing
It’s essential to file your taxes by the standard April 30 deadline, even if you think you don’t owe anything. The CRA has systems in place to find people who haven’t filed.
If you don’t pay your taxes on time, the CRA will charge interest on the amount owing. The compound daily interest rate starts on May 1 and can be as high as 10% of the balance due.
This is an excellent reason to explore penalty and interest relief options due to extraordinary circumstances or financial hardship.
They can also work with the CRA to arrange a payment plan to pay off their personal income tax debt over an extended period.
In addition to penalties, the CRA charges compound daily interest on unpaid taxes starting from the day after the tax filing deadline. Here’s how it works:
Deportation
In cases where tax fraud or evasion results in a conviction, it can have clear, direct consequences for noncitizens, including denying a sought-after immigration benefit.
It can also impact the immigration adjudicator’s discretion if the fraud is deemed an aggravated felony or crime of moral turpitude.
Those convicted of tax fraud or evasion can be removed from Canada and cannot return until they receive an Authorization to Return to Canada (ARC).
They must pay any cost the CBSA incurred for their removal.
Thousands of people were deported even as COVID-19 raged last year, data seen by Reuters shows. This is even more troubling because governments worldwide have cautioned citizens against travel. This is because of the risk of spreading the highly transmissible virus.
Criminal Charges
While owning tax debt is not a crime, failing to file taxes can impact your eligibility for certain benefits. The CRA may be able to help you develop an acceptable payment plan for your outstanding balances.
You can be imprisoned if you are found guilty of evading taxes by lying on your return. In addition, destroying or disposing of books and records or willfully avoiding filing a return. While these cases are rare, they do occur.
The chances of going to jail for evasion or negligence are slim. However, the CRA will take any means necessary to collect what is owed. Filing your returns on time is best to avoid hefty penalties, interest, and deportation.
Other Consequences
For many people, not filing taxes starts innocently. They don’t file because they forget or life gets in the way. One year becomes two, then three, and so on. Eventually, it becomes a habit, and years of unfiled returns start piling up.
Filing late may also delay receiving refunds or benefit payments, as the CRA needs to be able to calculate these amounts accurately based on information submitted by individuals.
Those who have been repeatedly filing late or not at all are in danger of facing penalties and charges that will increase the amount owed, including compound daily interest.
There are ways to request penalty and interest relief if you can demonstrate extraordinary circumstances or financial hardship. Contact our CRA for more information.
Steps to Take If You Haven't Filed
If you’ve missed the tax filing deadline or have failed to file taxes for previous years, it’s essential to act:
Filing taxes in Canada is more than just meeting deadlines. It’s a legal duty with severe consequences for your financial health and legal status.
Failure to submit taxes can have long-term implications, including penalties and interest charges, loss of benefits, and legal action.
Understanding your tax duties and proactively rectifying difficulties will help you avoid extra stress and assure compliance with Canadian tax regulations.

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