Deadlines for tax filing are important milestones for businesses, making sure they promptly meet their financial obligations to the Canadian government. For businesses in the country, adhering to such deadlines is especially vital. Missing these deadlines can result in different severe consequences. These consequences can include interest charges, financial penalties, possible legal action, and damaged business reputation. Learning about the different risks related to missing tax deadlines can help business owners mitigate them. This website provides more information on the effects of missed tax filing.
If you own a business, you must know when your tax return is due. Missing a deadline can lead to expenses through penalties and interests. This is a serious mistake that you can make as a business owner. Not filing your tax return on time, particularly if it’s not your first time, can trigger an audit from the CRA.
Tax Filing Deadlines to Meet for Businesses
Businesses in Canada should file different kinds of taxes that have specific deadlines. These deadlines include the following:
- Income tax. In general, corporate income tax returns are due 6 months following the fiscal year’s end. Partnerships and sole proprietorships typically have until June 15 to pay; however, any balance owed should be settled by April 30.
- Payroll taxes. Payroll remittances cover EI premiums, CPP contributions, and income tax deductions. They should be paid up to the 15th of the month after the payroll period.
- GST/HST. GST/GHT payments and returns must be paid a month following the reporting period’s end.
Why Maintain a Tax Calendar
With a tax calendar, you can stay organized as it gives you reminders for upcoming deadlines. You can set up several notifications or reminders if necessary. But having a CPA handling your taxes and business finances can make all the difference.
Consequences of Late Filing
Filing your tax returns beyond the deadline can lead to the following consequences:
- Financial penalties. Such penalties are meant to encourage prompt compliance and increase your tax liability. If you own a corporation, your penalty is 5 percent of the balance owing along with 1 percent of the balance for every full month you failed to pay the return on time, for up to 1 year. Also, both the late filing penalties and outstanding tax balances are added interest, which can change every quarter.
- Escalating penalties. If you have been consistently late in filing tax returns, your penalties and charges can be doubled. Thus, your late filing fee is 10 percent of the unpaid taxes plus 2 percent of every month you have not paid the taxes.
- Loss of refund. The CRA will withhold any refund owed to you. Also, it may deduct it from the taxes you have not paid until you meet your tax obligations.
- Benefit losses. If you get government benefits for your business, you will lose eligibility for them until your taxes are filed and you are qualified for such benefits again.
- Collections. If the CRA takes your unpaid taxes to collections, your credit rating will drop significantly. This can prevent you from taking out business loans and securing investments.
- Criminal charges. In serious cases of repeated delayed tax filing, you can be charged for tax evasion by the CRA.
Missing tax deadlines can result in different adverse consequences for your business.
From significant financial penalties to high interest on unpaid taxes, the risks are substantial. As a business owner, you must understand such implications and take measures to guarantee compliance with your tax obligations.
By adopting organized financial practices and hiring a CPA, you can avoid such pitfalls and maintain good financial standing. Keep in mind that prompt tax compliance is a legal requirement and an important component of effective business management.
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