Tweet

Why Over 1 Million Canadians file their taxes late every year

Written by: Neel Roberts

Article Overview: You will read about the top 10 reasons most Canadians file their taxes late (or not at all). See how you can avoid being one of them!

Why Over 1 Million Canadians file their taxes late every year

Most of the reasons Canadians file late (or not at all) is due to misunderstanding of the requirements for income earning citizens. We have identified some important information for Canadian taxes payers to ensure they are compliant with the Canada Revenue Agency (CRA).

You may not be required to - There actually is a small minority who are not required to file one. Children under 16 are a great example as well as spouses who are at home full time and have little/no income. Those deemed non-residents and cleared estates after deceased returns are filed are also good examples.

Missing information- Whether you were employed, self-employed or not working at all, you usually require a certain amount of documentation to file a return. In a case that you had no reportable income, you generally only need your basic personal information like your name, address, SIN, date of birth, marital status, etc.

You have not been asked to- CRA generally don’t ask a late filer to file right away and can take a few years before they catch on. Some may actually get away with it for many years because there is no absolute way to tell if the taxpayer has moved out of the country, stopped working or died.

Deferring refunds & benefits- Some taxpayers perceive their refunds as an annual windfall and treat their tax account like a savings account in a bank. There is nothing legally wrong with this as long as you realize your giving the government an interest free loan with no benefit to you.

Not sure of their situation- In a family situation, it’s quite common for a spouse to handle the filings for two or more people without the others being too aware of the occurrence. Now suppose this spouse leaves or dies, then unfiled returns can go on for years before they realize that they haven’t got a refund, GST credits or a “request to file” letter shows up one day in the mail.

May owe a lot of money- This is quite common for those who are self-employed and have not paid tax installments to ease the bite at tax time. Before you assume you owe a lot, you should speak to a tax professional. In many case, they can use deductions, past losses and expenses the average person doesn’t think of to lower their liability. Also, the CRA has a variety of programs such as Voluntary Disclosure and the Fairness Act to possibly eliminate interest/penalties normally applied on top of balances owed.

Believe taxes are optional in Canada- Many naive or underhanded people fall into this trap. The truth of the matter is every level of government has the right to tax its residences’ and/or user of services accordingly. There is no such thing as “optional taxes” for the simple reason. Guess which option people would choose? Common sense tells you governments require tax revenue to fund its expenses and operations which generally benefit the population. While some countries like the Bahamas and Cayman Islands are income tax free, most aren’t and deliberant non payments are considered evasion which is prosecutable.

Avoiding claims on your refund & benefits- Taxpayers who owe other government agencies or authorized claimers monies from previous unpaid liabilities may have the right to the refund/benefits before the taxpayer. If the taxpayer is aware of this, they may put off filing until they are either settled or with hopes of them disappearing. Unfortunately the latter rarely happens and usually a tax professional CAN’T help you. You should get a hold of the appropriate agencies and see what is required to settle these balances and ensure what they claim is in fact accurate. Please be aware that some agencies like maintenance enforcement and student loans are exempt from bankruptcy laws and you have to pay them no matter what!

Tax treaties & exemptions- Depending on the treaty, certain individual are exempt based on their country of residence or birth status. Employees on a temporary work visa are actually still employed by the parent company outside of Canada, but they are living and getting paid in Canada strictly because of their work. These individuals should discuss their situation with the International Tax Office in Ottawa (613) 267-5177 as they may still be required to file to qualify for the exemption. Most card carrying First Nations residents are exempt from paying income taxes, but certain rules do apply like earning the money on a reserve, which is usually marked on the T4. Also, benefits like GST and Child Tax Benefits are still subject to a filed tax return, so they are still obligated to file if they want to receive them!

PROCRASTINATION!- Now you just know this was going to show up and actually this is by far the #1 reason. So why did I leave it for the last? Well, because there actually are legitimate reasons why people don’t file, but unfortunately laziness is WAY ON TOP of the heap. Let’s face it, if there was a polite way of saying it, I would have, but there really isn’t. Someone once told me that procrastination is death on the installment plan; well put! Now don’t get me wrong, all of us have delayed at some point, but the bottom line is you either conquer it or its conquers you.

Thanks, Neel!


About PTC Canada (www.ptccanada.com)
PTC Canada believes in helping the client and taxpayer whenever they can, simply because we work for you and nobody else. This free tip sheet, which will save you several thousands of dollars, is just a sample of our business philosophy. We are very hands off in our marketing and hands on when we work for you. Our client like us because of the results we achieve for them and top notch service that accompanies it. Join our free mailing list today which gives you updates of the tax events and unique products/services we recommend to ease the tax burden.

Related Articles
  5 Reasons to File Delinquent Tax Returns: There's Still Hope if You Haven't Paid Your Taxes This Year
  How, Why and When to File a Tax Extension
  Small Business Taxes In The US
  What To Do Before the October 15th Tax Extension Deadline if You Need Tax Help for Unfiled Tax Returns or IRS Back Taxes
  How to Get IRS Tax Relief from Back Taxes or Unfiled Tax Returns

Article Tags: canada revenue agency, canadian taxes, canadians, cra, date of birth, family situation, filer, important information, installments, interest free loan, mail, misunderstanding, non residents, occurrence, reportable income, savings account, small minority, taxpayers, unfiled returns, windfall
Referred by: http://www.infinity-pr.com



Related Forum Posts
Re: How To Be Rich - [quote="TheRainmaker":tst8wsa8]Sounds great. What exactly have you found to be eye opening??[/quote:tst8wsa8] The first eye opener was measuring wealth by your total assets 1 Million - 2 Million Pounds The Comfortable Poor 2 Million - 5 Million Pounds The Comfortably Off 5 Million - 15 Million Pounds The Comfortably wealthy 15 Million - 40 Million Pounds The Lesser Rich 40 Million - 75 Million Pounds The Comfortably Rich 75 Million - 100 Million Pounds The Rich 100 Million - 200 Million Pounds The Seriously Rich 200 Million - 400 Million Pounds The Truly Rich 400 Million - 999 Million Pounds The Filthy Rich Over 999 Million Pounds The Super Rich
Looking for tax advice from full time internet marketers - I am a full time internet marketer and have been for years. My entire income is made online and I have plenty of business expenses, so I don't know how that works with taxes. Every year I have someone else do my taxes but this year I am trying to decide if I should just do them myself or not. So I have a few questions for any other full time internet marketers that do your own taxes... 1) What program do you recommend to use? I've heard about turbotax for years but I am not sure if that's the best thing for my situation or not. 2) How difficult is it to actually do them yourself? 3) Is it worth doing myself or should I just keep having someone else do it? 4) What would I need? Obviously turbotax (or something similar) along with my income and expenses, but is there anything else? Also, what are some things that you deduct each year? I have certain things that I always do but I could be missing some, so it would be nice to see what others do. Thanks in advance!
Six Tips for Taxpayers Starting a New Business - Hi Guys, Just want to share tips for new business owners or for those who are going to start a new business: Here are the top six (6) things the IRS wants you to know if you plan on opening a new business this year. 1. First, you must decide what type of business entity you are going to establish. The type your business takes will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation. 2. The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax. 3. An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. 4. Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. 5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used. 6. Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.
Out of State or Out of the Area Taxes - [quote="OmnivoreInk":2o79s46a] I didnt' realize that the state of New York charges non-residents taxes, if they do a portion of their work in that state. For example, when a baseball, football or basketball team comes in to New York to play a team there - the visiting team's players have to pay taxes on the income they earn from that game - to New York. As far as I'm concerned, that's outrageous!!![/quote:2o79s46a] When my account was set up to pay monthly state taxes, they asked if I was a company from out of the area that made money in the state of Virginia. That was one of the many options. Actually, I have business license in 3 different cities and 3 different counties because I do work in all those localities. Its a huge pain because at the end of the year, we have to break down every payment by the locality and then file all those different business licenses in the localities. And, of course every one has slightly different requirements about how much you can make before paying for a license or if they have a minimum or maximum amount of work that can be done before paying more. Then any amount that isn't accounted for with a different area is paid in the city where my office is located. What a pain, but they figure that if I make money in their locality, they deserve a piece of it. Chris
dreamhost file manager - I'm not familiar with Geocities file manager. I have been using Dreamhost for the last 3 years and am quite pleased with the service. I haven't had my sites go down like others have stated. Thier file manager is quite good and even has dates as to when the last file was saved. They have a webftp service (I believe you refered to this as a 'File Manager') and it's very quick. some of the benefits of hosting with them is that the longer you stay with them the more bandwidth and file storage capacity they provide you. This usually goes up each week or month - i forget.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

9 Steps to Improve Performance

Paint A Word Picture - Excite Your Customer

Anger Solutions at Work: Why Customers Get Angry

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.