4 Steps To Take If You Haven’t Filed Your Income Tax Returns In YearsAdmin
Do you know that every year millions of Canadians feel the pressure of delinquent taxes?
There can be a number of reasons for falling behind on filing income tax returns. But whatever reason it was, know that we understand and are here to help. If you are one of these individuals, take a deep breath, and accept that there is no need to panic.
Also note—all individuals who have no income to report also need to file a return. And sometimes, by not filing income tax returns, you might be missing on a refund from the government.
Here are the next steps you need to follow to rectify this situation:
- Get in touch with a qualified accountant who can help you sort through the paperwork and deal with CRA. Also, do adequate research to make sure that the CPA has dealt with cases like yours before.
- Collect all your tax documents. You can retrieve your tax slips by via My Account for Individuals, if you already an account set up with the CRA. Alternatively, you can authorize your accountant to access your tax records. For tax supporting documents like rental property, self-employment income, etc., you should go through your bank statements and receipts to compile this information. It is highly recommend that you do not call or inform the CRA about your delinquent taxes unless you have already been notified by the CRA.
- Talk to your accountant to see your estimated tax owing, and perform a cost-benefit analysis to determine if Voluntary Disclosure Program (VDP) is the right approach for you. ‘VDP’ is a great program that allows people who haven’t filed their returns in a few years a second chance to do so. Done correctly, the individual can usually pay just the tax, with no penalties. To be eligible to file under VDP, the application should meet these 5 conditions:
- It should be voluntary;
- The application should be complete;
- The application or potential application of a penalty should be involved;
- Information included should be least one year past due; and
- Payment of estimated tax owing should be included.
- Now it’s the time to sit with your accountant to decide if VDP is the right approach for you. If this is the case, get your returns prepared.
In the future, keep in mind, whether you have received a notice in the mail or not, never ignore filing tax returns in the future, because unfiled tax returns can have serious repercussions. A a late filing can incur a 5% penalty on balance owing after April 30th, and additional 1% per month up to a period of 12 months. This penalty doubles for a repeat offender.
As always, know that we can help you in rectifying your tax situation. Please call us at +1-844-982-2727 or visit https://www.wtcca.com/ for more information. You can also book a free consultation with us by choosing your preferred time slot at https://calendly.com/wtcca/free-consultation.