Tax Tips & Pits – Should I file or should I wait?

"May 2 is the tax due date this year. Any reason for filing sooner than later?"

The April 30th tax deadline is looming, well actually the May 2 deadline is looming. April 30 is on a weekend so Monday, May 2 is the tax due date this year.

Any reason for filing sooner than later?

If you have a refund, why not? There is reportedly about $750,000,000 of unclaimed refund cash sitting in Canada Revenue Agency’s (CRA) bank account. You might want to get your share sooner than later I would think.

And whether you have a refund coming or not, if you qualify for refundable tax credits, such as the GST credit, you have to file. Or if child benefits or pension benefits are determined by your income, you have to file. Or if you qualify for premium relief like for the medical services plan, you have to file.

If taxes are owed and if you haven’t at least filed the return, procrastinating can cost severe money. On May 3, the tax owed may have a 5% penalty tacked on, so a $1,000 tax bill is $1,050. Plus a1% penalty is added for each month thereafter.

By the way, CRA has the discretion to make that 5% penalty as high as 50% of taxes payable. This means a $1,000 tax bill could jump to as high as $1,500 on May 3.

Refund or not, filing on time keeps you off CRA’s radar as a non-compliant taxpayer.

Similarly, staying off CRA’s radar includes a self directed request to have CRA adjust your own return if you discover an error or omission after filing your return, a return for any of the prior seven years as a matter of fact.

CRA’s monster computers match data from slips reported on a tax return, with copies of slips CRA receives from employers, banks and other sources and if there is a discrepancy, a contact to you from CRA is triggered.

It’s better to self-identify this issue than have CRA find it first. If an adjustment is initiated by you, it is much more likely that CRA will only assess interest and not a penalty on any tax due.

A final word, if CRA does contact you requesting action on your part, it is best not to delay in dealing with the request, even if it’s a call to CRA stating, “I am working on it”. Ignoring a CRA request may not only cost you more money than it would have, but you may be on CRA’s radar longer than you normally would have been.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous columns visit www.JBSbiz.net.