The majority of Canadians must file taxes every year, regardless of whether they owe taxes. If you live in Canada, you must file a tax return with the Canada Revenue Agency (CRA) each year by April 30, although self-employed individuals have until June 15.
These requirements apply to all Canadian residents, as well as international students, seasonal workers, Indigenous people and non-residents with Canadian income.
Learn more about filing your taxes in Canada and the financial implications if you fail to do so every year.
Can you skip a year of filing taxes in Canada?
The only time you can skip your tax filing is when you don’t owe any taxes and aren’t seeking any benefits. If you owe taxes or want to claim any credits or benefits, you must file your taxes each year. Neglecting to file can be classified as tax evasion, which can have significant legal and financial consequences.
Even if you don’t owe taxes, failure to file could disqualify you from receiving certain benefits, such as the Canada Child Benefit (CCB) or the Guaranteed Income Supplement (GIS).
How often do you have to file taxes in Canada?
Taxes must be filed each year by April 30 or June 15 if you or your spouse are self-employed. However, all taxpayers must submit payment by April 30 to avoid fines or penalties. If you own a business, you can file your tax return by June 15 but must pay off your tax debt by April 30.
What happens if you don’t file your taxes in Canada?
At a minimum, failure to file your taxes prevents you from taking advantage of benefits such as the GST/HST credit or CCB. However, if you owe taxes, failure to file could result in significant legal and financial penalties.
like Yannick LemayLearning Program Leader and Tax Specialist at H&R block Mentioned in Moolala: Money Made Simple Podcast“The reality is that there are very serious and serious consequences for not reporting your income, and this could of course result in penalties and interest on the amount you owe… and could even lead to criminal charges.”
Penalties
Besides the significant interest that is applied to unpaid balances, failing to file your tax return triggers another consequence: penalties. The penalties are harsh! If you fail to file your 2023 return by April 30, 2024, anything you owe will be assessed a late penalty of 5% of the unpaid tax plus 1% for each full month late, for up to 12 months. So, for example, if you don’t file your 2023 return until April 2025, you’ll face a 17% penalty on any balance you owe, plus interest at the specified rate.
If you are a chronic latecomer, the penalties will increase significantly. For example, if you have late-filing penalties in any of the last three tax years, a penalty of 10% plus 2% per month (for up to 20 months) can be applied to your 2023 return if it is also filed late. So, if you are late filing penalties in 2022 and decide not to file your 2023 return again this year, by the time you file in April 2025, your penalty could be as high as 34%!
Of course, if you do not have an outstanding balance, penalties/interest will not apply to you.
Is there a penalty for filing taxes late if you don’t owe anything?
If you don’t owe taxes, you can file after the deadline without any penalties. However, if you expect a refund, the CRA will not release your money until you file your return. Additionally, you may see delays in the calculation of any benefits or credits.
What are the benefits of filing taxes?
Aside from meeting legal requirements, filing your taxes offers many benefits, including:
- Possibility of tax refund
- Access to tax benefits and credits
- Eligibility for some government programs
- Eligibility for educational benefits, including the Canada Learning Bond
Filing taxes can also benefit individuals with debt or poor credit scores. Mike BergeronThe advisor’s director highlights the impact of filing taxes on debt management and credit scores, explaining, “The benefits of filing taxes each year for those with no taxable income is primarily to ensure consistency in receiving government rebates. (HST/GST, Trillium, Child Tax and OAS/) GIS) With no filing, this will reduce your monthly income and make debt payments more difficult. Therefore, this can affect credit scores.”
Filing taxes can help individuals access additional funds that can be used to pay off debt, which in turn can help improve credit scores. “Filing your taxes is not directly related to credit score but indirectly affects monthly income used to manage debt,” Bergeron explains.
Additionally, you can take advantage of free tax assistance offered by the CRA when you file on time.
like Jeff LoomisExecutive Director of PaidSubscribe to our website Molala: Making Money Simple Podcast“Filing taxes is crucial for many Canadians, and then even more so when people are living on low incomes so that people can access benefits that can help make ends meet. Really concrete examples are the Alberta and Canada child benefit and the GST rebates These are really well-known benefits that you can’t access in Canada unless you file your taxes.
What can happen if you don’t pay your taxes?
Failure to pay taxes is a criminal offense in Canada, as it is a form of tax evasion. Furthermore, failure to pay taxes can result in benefits being interrupted or access to tax credits. You will also have to pay taxes on your next tax return.
Is not paying taxes a crime in Canada?
If you fail to pay the taxes you owe, you could be convicted of tax evasion, which is a serious crime in Canada. Potential penalties include fines ranging from $1,000 to $25,000 and imprisonment of up to one year.
Interruption of benefits
If you receive the Canada Child Benefit or Old Age Security benefits, filing your return on time is especially important. Your eligibility for each of these benefits is updated each July and is determined by the numbers on your tax return. Your benefit amount is also tied to your income listed on your return, so if you fail to file your tax return by the April 30 deadline, you risk delaying your benefits.
Eligibility for the quarterly GST/HST credit, as well as various other provincial benefits, is also determined by the numbers on your tax return, so it’s important to get it on time to take advantage of these credits.
Income records
Beyond the direct financial implications, not having a current tax return can impact other aspects of your life. The numbers on your return are used for many other purposes, such as identifying:
- Loans of all types, including student loans, mortgages, and business lines of credit
- Student grants, in addition to some grants and scholarships
- Grants to low-income people for programs such as home repairs and heating rebates
As you can see, failure to file a tax return on time can lead to many negative consequences. Even if you can’t pay your balance in full by April 30, file anyway, you’ll save yourself money and hassle in the long run!
With easy-to-use tax preparation software like TurboTaxyour returns are prepared and filed quickly and require taxes to be done correctly.
Get help with tax debt
Filing and paying your taxes on time will keep you out of legal trouble and allow you to maintain your eligibility for tax credits and benefits. Do you suffer from tax debt? Subscribe to our newsletter to get expert advice.
