As a small business ourselves, we understand the tax challenges that small businesses in Winnipeg face today. We are just fortunate that we are an accounting and bookkeeping company! When you are running your business and managing multiple roles and responsibilities – tax filing can become a very daunting task. However, it is not something that you should put off – always file before your tax deadline or else you can face some very hefty penalties.
When you file late, penalties and interest will be applied on the unpaid balance including penalties. As of May 1st, any amount owing is subject to a 5% late-filing penalty which is compounded daily plus 1% for each full month that the return is late (to a maximum of 12 months). So you can see how quickly your penalties can all add up!
Keep in mind that these penalties don’t just cover late filings – they can apply too if you fail to report your full income. In that case, you may be subject to a penalty fee of 10% of the amount that was not reported. If you make any false claims on your T1 return, the penalty can be $100 or 50% of the understatement of tax or overstatement of credits (whichever is greater).
The CRA may also charge interest if you make late or insufficient payments. The interest is determined every 3 months and it is compounded daily on the amount owing.
Penalties and Interest can be very costly to your business – so you should always file your taxes on time and pay your full balance owing to avoid these penalties and any arrears interest! Contact Five Star Accounting to learn more about how you can ensure your next year’s filing is done on time.