June 15, 2018 has come and gone, and with it the small business tax deadline for the 2017 tax year. But if you missed it, that doesn’t mean you can wait another year to file.
Filing taxes after the self-employed tax deadline isn’t advisable (it’s really best to file before the deadline), but it’s better than not filing at all. For one thing, the longer you let the problem drag on, the more interest and late penalties you’ll build up.
If you owe, the Canada Revenue Agency (CRA) can charge interest starting after April 30, 2018 and late-filing penalties after June 15, 2018. The late-filing penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month you’re late, up to a maximum of 12 months.
If you’ve missed filing in a previous tax year, you could be charged even more — up to 10% of your balance owing, plus 2% for every full month your balance is late, up to a maximum of 20 months.
By letting your return linger unfiled, a small payment amount could double. If you already owe, do you really want to pay more?
And if you don’t pay, the CRA can take collection action without a court order. This could include contacting your clients for wage garnishment (causing embarrassment and potential harm to your small business), seizing funds in your bank account, placing on a lien on your assets, and more. In the worst-case scenario, you could go to court for tax evasion and be fined even more penalties and interest. In short, not something you want to deal with.
The far better option is to be proactive, no matter how hard it might seem. Ignoring your small business tax problem isn’t going to make it go away. Instead, look for professional help to get back to financial health and stay out of further trouble.
If you’ve missed the June 15 self-employed tax deadline:
- File your taxes, even if you’re late. If you’re not sure how to start, contact a financial professional right away. If you know you’ll owe, but can’t pay, a Licensed Insolvency Trustee can help. LITs are the only professionals in Canada, besides judges, who can stop CRA collection action. If you haven’t filed because you don’t have the money to pay your taxes, a LIT can help you explore options for dealing with debt.
- If you can’t pay, don’t try to negotiate with the CRA on your own. Sometimes the CRA will make a payment plan, but it’s rarely in your favour and in most cases, they will require payment in full. It’s better to work with someone who’s in your corner – a qualified LIT.
- After filing your 2017 tax return, make a plan for 2018. What went wrong this year and prevented you from getting your taxes filed by the deadline? Figure out the source of the problem and find a solution so you are better prepared for the future.
Don’t let one mistake snowball into a bigger problem. Here at Fuller Landau Debt Solutions, we offer personalized debt help and can find a solution if you’ve missed the small business tax deadline.
Contact us today for a free consultation. Call (416) 927-7200 or visit www.fullerdebt.com.