Each financial year, Canadians and Canadian tax residents have to submit their tax returns to the Canada Revenue Agency (CRA). The CRA determines whether or not the tax filed is appropriate and is paid by individuals on time. Once you have adequately filed a tax return, there are two possibilities - either they receive a refund or pay an amount due.
If, in any case, you refuse to pay the due tax amount or file your taxes late, the CRA has the power to impose a penalty and fine.
The tax return filer has to pay additional monthly interest and the tax amount along with the penalty. Whether it's your first time filing your taxes or looking to know how the process works, be sure you read the article thoroughly or contact us, info@nuages.ca for all tax-related matters.
Who Is Eligible To File A Tax Return
The below are eligibility criteria for a person to file a tax return in Canada.
● If you live in Canada or have recently started working in Canada, you must file a tax return to the Canada Revenue Agency.
● If you are a student in Canada and have a Social Insurance Number (SIN)
● If you are a permanent or temporary resident in Canada, have a Social Insurance Number (SIN)
● If you are filing a tax return for someone who has recently died. To file a tax return on their behalf, you must be their legal representative.
What Happens If You File Tax On Time
There are three main ways to file a tax return in Canada. Online, in-person or by mailing your tax return.
Remember, the method used to file your tax will determine the processing speed by the CRA.
Once the CRA has received your tax return, they will review all information, calculations and contact you for any error or omissions.
After filing a tax return, there are three outcomes
1. You file a nil return
2. You get a refund
3. You owe taxes
We have explained it in further detail below.
● Nil return – This happens when you have a nil taxable income. Neither a refund is due to you nor taxes are due to the CRA.
● Refund - If you are owed a refund, the CRA will mail you the refund in the form of a cheque.
If the CRA has your bank details, the amount will be directly deposited into your bank account.
The time you get your refund will depend on the method you filed your taxes; if it was filed online or with an accountant, it might take two weeks. If you file your taxes via mail, it may take four to six weeks.
● Balance - On the other hand, if you have to pay a balance of more than C$2, it must be deposited before or on April 30th. If you don't do so, you will be fined.
The CRA has the power to charge a late fee and interest.
What Happens If You File A Tax Return Late?
In case you've missed the due date of filing the tax return, or you've just forgotten to file your tax return, the CRA has the power to impose fines and penalties, including monthly interest.
Let's discuss the case if you've missed the due date of the tax filing, that is, April 30th.
Residents of Canada are eligible to file a tax return before April 30th. Aside from this, there are certain circumstances in which non-residents have to file a tax return. If any taxpayers miss the deadline, the CRA will charge a penalty and monthly interest.
The penalty and interest start on May 1st and continue until the outstanding amount is paid in full.
Final Words
If you are looking for a stress-free tax return, contact us today.
We are Chartered Professional Accountants with over 20 years of experience.
We don't just file your taxes; we diligently review every area of your taxes, walk you through the process and defend you when it comes to CRA assessments and reassessments.
If you're filing a tax return on your own or you wish to hire an accountant for help, it's essential to prepare all the necessary documents beforehand. If you're a resident of Canada, you must declare income, both the internal and external income you've earned in Canada.
It is important to keep your slips and receipts safe and secure for a minimum of 6 years for future reference.
After successfully filing your tax return, you will receive a notice of assessment from the CRA outlining your entitlements.
Remember, if you've missed the deadline of filing the tax return, make sure you do it as soon as possible to avoid hefty penalties.