The Benefits of Filing your Personal Taxes on Time in Canada
Filing your personal taxes on time in Canada has several key benefits, both financial and legal. Here’s why it’s important:
1. Avoid Late Penalties & Interest
- The Canada Revenue Agency (CRA) imposes a late-filing penalty of 5% of the balance owing, plus 1% per month for up to 12 months if you file after the deadline.
- If you have a history of late filing, the penalty can increase to 10% plus 2% per month for up to 20 months.
- Interest is compounded daily on any unpaid amounts.
2. Receive Your Refund Sooner
- If you’re owed a tax refund, filing early ensures you get your money back sooner.
- You can use this refund for savings, investments, or paying down debt.
3. Prevent Delays in Government Benefits
- Many government benefits depend on your tax return, such as:
- Canada Child Benefit (CCB)
- GST/HST Credit
- Old Age Security (OAS) & Guaranteed Income Supplement (GIS)
- Canada Workers Benefit (CWB)
- If you don’t file on time, these benefits might be delayed or even stopped.
4. Maintain a Good Tax Record
- CRA considers consistent late filing a red flag, which could lead to audits or more scrutiny.
- A good tax record also helps if you need to prove income for loans, mortgages, or immigration purposes.
5. Avoid Future Tax Issues
- If you delay filing, it becomes harder to catch up in future years, leading to higher penalties and stress.
- The CRA has the right to estimate your income and assess taxes based on their calculations, which may not work in your favor.
6. Contribute to RRSP & TFSA Efficiently
- Your Registered Retirement Savings Plan (RRSP) contribution room is based on past income.
- Filing on time ensures you get the correct RRSP deduction limit and don’t over-contribute.
- Filing also updates your Tax-Free Savings Account (TFSA) limit, avoiding over-contribution penalties.
7. Peace of Mind
- Avoid the stress of last-minute filing, penalties, or CRA collections.
- You’ll have a clear financial picture for planning your budget, savings, or investments.
When is the Deadline?
- April 30 is the usual deadline for personal tax returns.
- June 15 applies to self-employed individuals, but any taxes owed are still due by April 30.
Bottom Line
Filing on time helps you avoid penalties, receive benefits, and stay in good financial standing. Even if you owe taxes but can’t pay in full, filing on time at least prevents additional late-filing penalties.
The information provided is for educational/entertainment purposes only. Actual information may vary, please consult our office for further details. Got a question? Feel free to reach our Helpdesk at (437) 286-2000 or helpdesk@assentt.com
