Few people enjoy doing their taxes because it’s a complex and tedious process. Ask any of the 27.2 million Canadians who submitted their returns in 2019, and you’ll understand why.
Besides those who fulfilled their legal obligations, there’s also a group of taxpayers who don’t comply with the law. There are a variety of reasons such as:
- These individuals don’t think that they’ll be liable for taxes, so they don’t file.
- Some people know they’ll owe the government and can’t afford to pay.
- Those who mistakenly believe that they won’t have to pay if they do not file because no one will find out.
- Many taxpayers who lost their financial records and can’t compute the income they’ve received. They also don’t have the necessary documents to support their deductible expenditure.
Tax Evasion
Failing to file a return is a crime in Canada as it is in other countries. If you’re one of the defaulters, you might hope the problem will go away if you ignore it. You could try to sort out the issue personally. However, the process is not as straightforward as you might expect.
The canadiantaxamnesty.ca website reminds taxpayers how challenging it can be to fill out the relevant forms and submit the proper supporting documentation without extensive knowledge of the Canada Revenue Agency’s requirements.
Consequences of Late Filing
As mentioned earlier, not filing your return is against the law. The CRA can charge you for tax evasion. You could end up serving a jail term.
Even if the agency decides not to take you to court, you’ll still have to pay the amount you owe. On top of that, you’ll incur penalties and interest on the overdue sum.
Voluntary Disclosure Program
Fortunately, you may have a way out and avoid prosecution if you come forward on your own accord to correct your mistake. The CRA’s Voluntary Disclosure Program (VDP) is an initiative that allows taxpayers a second chance to fulfill their filing obligations.
The VDP is not a guaranteed get-out-of-jail card. You’ll need to apply, and the CRA will review every application on a case-to-case basis.
There are stringent criteria you must meet to be eligible to request inclusion into the program. If you succeed, you’ll stand a chance of escaping prosecution and jail time. You’ll still have to pay the taxes you owe plus interest and penalties, though.
The CRA may waive the latter and part of the former charges if they see fit.
Consult a Professional
That was a brief explanation of late filing and its repercussions. If you’re in such a predicament, it’s of paramount importance that you seek legal advice. You don’t want to get into deeper problems because you fail to comply with the stringent CRA requirements.
Seeking legal assistance may cost you a fair chunk out of your own pockets, but it can ultimately save you money in the long run and possibly keep you out of prison.