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Tax Tips: Be Prompt

Originally published on Advisor.ca

Filing your return and paying your taxes on time is crucial, the CRA reminds us. If a refund is due, it’s better to get it sooner than later, and filing early helps to avoid possible interest and penalty charges.

Filing and paying on time means that benefits and credit payments, such as the goods and GST/HST credit and the Canada child tax benefit won’t be delayed. In addition, if a client owes money, they won’t be charged a late-filing penalty or interest.

If tax for is owed for 2011 and clients don’t file their return on time, the CRA will charge a late-filing penalty of 5% of the 2011 balance owing, plus 1% of the balance owing for each full month that a return is late, to a maximum of 12 months.

The penalty is higher if you are a repeat late filer.

If a balance is owing for 2011, the CRA also charges compound daily interest starting May 1, 2012 on any unpaid amounts, so even if clients can’t pay all of their taxes owing right away, they should still file returns on time and pay what they can.

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Originally published on Advisor.ca

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