You may have owed taxes in the past and not filed or not reported all of your income. This may put you in a state of unease worrying about how you can make things right.
As your business or situation improves you may be in a position where you’re owed tax credits or refunds but your unfiled tax returns are preventing you from claiming the amounts now owing.
The longer you wait the worse it can become. Interest on amounts owing continues to compound and if you have multiple years of unfiled taxes the penalties double.
Better Late Than Never
CRA has a “voluntary disclosure” program that encourages errant taxpayers to come clean.
If you make a complete voluntary disclosure, no criminal charges will be laid. And no civil penalties will be applied. You will simply need to pay the tax you owe plus interest.
Claiming Amounts Owed to You
In addition to the peace of mind getting caught up with your unfiled taxes, there are refundable provincial tax credits that you could be claiming.
By filing and reporting your income you are also building RRSP contribution room. RRSPs are a great way to shelter your income from taxes and save for your retirement.
In addition to the tax credits and tax savings, your reported income will appear on your Notice of Assessment and will be used as proof of income should you require a loan or other financing to perhaps buy a home or invest in expanding your business.
Your Notice of Assessment will also include carry forwards of unused credits or capital losses. Claiming these will require you to file a tax return.
Don’t Give the Government an Interest-Free Loan
If you don’t owe taxes or have a tax refund there’s no interest or penalties; however you may lose credits if you don’t file within certain time limits.
And even though you owe the government interest if you’re late paying taxes, they’re not going to pay you interest on amounts owing to you.
Don’t Wait for CRA to Contact You About Unfiled Taxes!