The tax deadline is April 30 — less than a week away.
For many Canadians, this means searching a mountain of paperwork for missing tax slips, scouring wallets for wayward receipts and making the annual visit to the accountant for tax preparation.
But for some, April 30 will come and go like any other Tuesday on the calendar. Are you one of these folks?
Perhaps you made little or no income in 2012 so you don't see the need to file your income taxes. Or, maybe, you're only expecting a small tax refund and don’t see the need to send your taxes in on time.
But wait! There are compelling reasons to file your taxes on time each and every year.
We all like money, don’t we?
So, why would you let CRA keep your money? If you have had tax withheld from your income, then you’ll want to “apply” to get your money back by filing your taxes as soon as possible.
Any taxes withheld on your pay cheque are essentially an interest-free loan of your money to the government.
More of Your Money
You are entitled to tax credits and benefits but can only claim them if you file your taxes.
- Refundable child tax credit
- GST/HST credit
- Working income tax benefit credit
- Refundable provincial tax credits
Imagine that—receiving a cheque from the government even if you have no earnings and paid no tax.
Your Nest Egg
Contributing to an RRSP is one way to build your nest egg for retirement.
Filing an income tax return and reporting your income is how you build your RRSP contribution room. Without it, you can’t shelter retirement money in an RRSP.
Don’t want to think about retirement yet?
You can borrow money from your RRSP interest-free for a down payment on your first home under the Home Buyers Plan.
And, in order to qualify for that mortgage, the financial institution will likely ask for a Notice of Assessment. No tax return….no Notice of Assessment….no house.
Avoid Penalties (Even Jail)
You may think you don’t need to file but if you owe taxes and you don’t file a tax return, the penalties can be harsh—even jail time. While this is extremely rare, it is possible that an individual who fails to file a required tax return may be convicted and sent to prison for up to 12 months.
Failing to file a T1 income tax return when required will result in a penalty of 5% of the tax unpaid at the time the tax return was due plus interest charges plus a further penalty of 1% of unpaid tax for each month past the tax filing deadline.
File on time and avoid this pain.
If you want to avoid the interest and penalties or simply keep more of your money, call Canada's Small Business Tax Specialist. We can help.