Individual Tax Filing: Making Your Tax Payments, And The Consequences If You Fail To Pay Up

When faced with the complications of tax filing and payment obligations, a lot of people would love to just stick their head in the sand like an ostrich and pretend they aren’t faced with the tribulations of this dry (and sometimes scary) subject.

However, if you don’t take your obligation to file your taxes seriously, the Canada Revenue Agency (CRA) will catch up with you and make sure you come to heel. To help you understand the guidelines that the CRA has in place - Here is a general overview of a few of the collection policies that the CRA has for individuals/employees. This will help you understand your rights and responsibilities when you deal with the CRA; and perhaps reading this will help encourage you to avoid any potential “run-ins” along the way.

If you’re an individual taxpayer, you’re most likely an employee who will have paid part or all of your taxes through the amounts that your employer deducts from your income. The amount an employer deducts is based on the credits an employee claims on their form TD1, Personal Tax Credits Return. If your situation changes during the year (or if the information on the form is out of date) it’s your responsibility to complete a new form so that your employer can deduct the proper amount of tax from your income.

With these regular deductions, it’s less likely that you’ll have to pay a large tax balance when it comes time to file an income tax return. Employees who have more than one employer should only show each tax credit on the TD1 form given to one of the employers. The secondary employer should calculate source deductions without applying a tax credit.

Any amount you owe is payable in full immediately once you’re assessed/reassessed. If you can’t pay the outstanding debt, get in touch with the CRA immediately. You can call an agent at 1-888-863-8657 to discuss the payment of your debt either in lump sum or by installments. The last thing you should do is procrastinate – because if you owe, it’s only a matter of time before legal action will be taken to collect your unpaid amount.

If you do not pay an amount voluntarily - even if it's just a partial payment to start off with, the CRA may take legal action to:

  • Garnish your wages

  • Seize and sell assets

  • Use any other means under any applicable statutes or laws to collect an amount owing

If you disagree with, or do not understand, an assessment or a reassessment, you should contact or write to the tax centre that processed your return to discuss the matter or call the accountant who filed your return for you, to get a better understanding of the details. If you’re not able to resolve the issue, you have a right to a formal review. Review processes differ depending on what the disagreement or dispute is. For details about the reviewing processes available, you can visit: http://www.cra.gc.ca/resolvingdisputes

If the consequences of failing to pay your taxes aren’t enough to inspire you to lift your head out of the sand, the fact that you can be prosecuted for failing to file a return might get your attention. If you fail to file a return, you are guilty of an offence. If convicted, you’re liable to be fined for $1,000 - $25,000 – or, both a fine and imprisonment for up to 12 months.

The CRA’s duty is to ensure that all persons pay the required amounts of taxes, duties, fees, penalties and other amounts owing to the crown. If you have any questions, you don’t have to live in the dark, afraid that perhaps you’re making a mistake for simply not knowing the details and repercussions. The CRA is here to collect from and sometimes fine you, to capture your attention; but it also serves to keep you informed so that you understand exactly how to stay out of trouble. Give Paul a call at 705-728-6469 if you have any questions about these policies or visit the CRA interpretation bulletin by clicking here, if you need more information.

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