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Canadians are responsible for filing their own taxes every year. Covid did change things a bit as many relied on the CRB program. This has made tax time more overwhelming in years past. Despite this, you need to file your taxes on time. The tax season runs from March through to the end of April. If you owe, you need to pay by the end of April so it’s always good to prepare before March and then hand it in as soon as possible.
The deadline can vary depending on a few things. It’s important to understand when exactly you need to file your taxes as you don’t want any late fees like interest.
Your deadline for filing taxes will depend on the type of tax return. Generally, if there’s an amount owing that become due, it should be paid on the date of the deadline. This allows you to avoid interest so it’s important to understand what category is going to represent your return.
Individual Tax Return Deadline
If you’re filing an individual tax return, you can do so electronically in February. The last day to file taxes for the year is April 30th. You may be able to make other arrangements with Revenue Canada but generally, April 30th is the date where any amount owing in taxes is due. If you don’t pay on time, interest may be applied.
Self-Employed Tax Return Deadline
If you’re self-employed, there’s a different deadline altogether. You must file by June 15. The deadline will apply to your spouse.
Installment Payment Due Dates
You may arrange to pay your tax bill in smaller amounts through the year. These payments need to be submitted quarterly with the following deadlines:
If you don’t meet deadlines, you may end up having to pay a higher amount. This is for employed and self-employed Canadians.
If you’re representing the estate of a deceased person and are the Executor of a will, you have to complete the final tax return of the deceased on time. If the person passed away prior to October 31, the deadlines of the final return is May 1 of the following year. If the person passed away from November 1 to the end of the year, the return date is due six months after death.
If You Miss the Tax Deadline In Canada
It’s not recommended that you miss the tax deadline as this can come with costly expenses. We’ll go over what these penalties and fees are:
Late Tax Filing Penalty
When you miss your tax deadline, Revenue Canada will penalize you with a give percent charge on the amount owing. With every month that passes, they will add an extra one percent to the total. If you have years of missing out on filing taxes, they put a ten percent penalty on you upfront. There is also an extra two percent added to the total every month. The maximum penalty period is 20 months.
Here’s a breakdown.
Interest on Late Tax Filing
There are even more fees beyond the penalty fee. Revenue Canada will charge interest on the amount owed. This interest rate will depend on the type of taxpayer you are. As an individual taxpayer, you are charged five percent interest while a corporation is charged one percent in interest.
There are a variety of ways you can file your taxes with the amount of options for software that’s been made available. It’s easy and more convenient to do your taxes than ever. Here are the options for 2023:
Filing Online
You can use EFILE or NETFILE to do your taxes online. EFILE is used by accountants and other tax professionals while NETFILE is a program that allows you to file your taxes. This program has been approved by Revenue Canada. There are many different software programs that support NETFILE so you can choose what’s best for you.
Tax Clinics
If you’re close to the deadline and don’t have a large budget, there are free ways to file. If you have an easy return, you can go to a tax clinic. You can go to a Community Volunteer Income Tax Program, designed to help those with lower income and easy-to-do tax returns. There are tax professionals that help you out with your returns.
Mail-In Paper Returns
Some people would rather file taxes in the traditional way. You can do taxes on the paper tax forms and mail them to the Canadian Revenue Agency. You can order the paperwork online or download it and print them off to fill them in.
If you have money coming back to you, it usually takes about 2 weeks to get your refund. If you file by paper, it can take up to 2 months in some cases. These numbers are estimates as it depends how many people have filed at the same time as you. There’s no guarantee on refund time. You may get audited, which would require the CRA to investigate you. They won’t be sending you a refund during this time.
There are a few ways to pay less when it comes to your income tax.
Hire a Family Member
If you transfer a part of your income to a primary family member, you can lower your yearly income. This means you’ll have less taxes to pay. Having a family business can save you money as you may be able to transfer forms of taxable gains and dividend income to a taxpayer in your family that is a low earner. This can potentially move you to a lower tax bracket and reduce the amount of taxable income.
RRSP’s
By investing in your future, you can try investing in a tax-advantaged account including RRSPs, also known as Registered Retirement Savings Plan. The money you deposit into an RRSP account is tax sheltered so you reduce the amount you owe on your taxes. Later on down the road, you can use this money for an easier retirement.
TSFA
You can also invest in a TFSA, Tax Free Savings Account. You have the benefit of generating interest and you’re allowed to withdraw from this account whenever you want. Funds are tax-free always.
Write Offs
If you have your own business, you can write off some capital losses on your taxes. This could be anything from unpaid customer invoices to investments that lost their value. When they’re qualified, these capital losses can amend past bills and offset your yearly capital gains.
Avoid Late Penalties
One of the ways to save on taxes is to pay on time. There can be some high penalties from the CRA with interest added to the debt you owe. As an individual, you have to pay by April 30 while self-employed Canadians have a deadline of June 15.
Claim Expenses
Personal costs can be claimed when you file your return including:
As a Canadian, you’re legally responsible for filing your taxes on time and paying them. Your taxes pay for the things you get to enjoy in Canada like free medical, roads, schools, parks, and much more. When you file and pay your taxes on time, you’re paying into a system that you get to enjoy every day. You also save yourself from the stress of potential fees and penalties. It’s incredibly easy to file your own taxes thanks to easy programs. If you don’t feel confident in doing your own taxes, there are reasonable services that will do all the work for you.
You will owe for the first business day after the weekend or holiday is over. The CRA will extend the deadline. If you’re mailing in your tax forms, make sure they’re postmarked before the deadline or that you send it way in advance.
If you don’t owe taxes and meet the criteria, it’s possible you don’t have to file a return. However, if you made more than $400 as someone who is self employed, you will need to file. If you made less, there’s no need to file a return.
The deadline for contributing to your RRSPs so it’s applicable for the tax year of 2023 is March 1.
If you owe taxes to the CRA, there are many ways you can pay. You can use Paypal or an Interac e-Transfer as well as your online banking service. It’s also possible to create a pre-authorized debit process giving the CRA permission to take money from your account. You can pay by credit card or through Canada Post by sending a cheque by mail.
Your employer should give you your T4 by the end of February. If you don’t get it at this time, make sure to contact your employer to see where it is. You can also try to get it by going through your CRA MyAccount as your employer may have submitted it directly to them. You are in charge of getting your T4 so you want to make sure to follow up.
