The 2018 tax deadline for sole proprietors and partnerships is on June 15, 2018. Have you filed yet?

If not, don’t panic – you still have time. But it’s in your best interest to get your taxes filed by the deadline if you owe, or else you’ll be subject to Canada Revenue Agency (CRA) late-filing penalties, interest, and potentially worse consequences.

The CRA late-filing penalty is 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, up to a maximum of 12 months.

What’s more, if you’ve been charged a late-filing penalty on your return for 2014, 2015, or 2016, your late-filing penalty could be even higher: 10% of your balance owing, plus 2% of your balance owing for each full month your return is late, up to a maximum of 24 months.

Plus, if you’ve failed to report an income amount on your return for 2017 and you failed to report an amount on your return for 2014, 2015, or 2016, you may be subject to a federal and provincial repeated failure to report income penalty. These are equal to the lesser of:

• 10% of the amount you failed to report on your return for 2017; and
• 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount of you failed to report.

And then there’s the interest. Unfortunately, even though the self-employed tax deadline is on June 15, 2018, if you didn’t file your return before April 30, 2018 (the personal income tax deadline), you will already be accruing daily compound interest.

The CRA starts charging interest on May 1, 2018 for any unpaid amounts owing for 2017 – and this includes your sole proprietor return. But you’ll still have to pay far less interest if you file by June 15, 2018 then if you don’t file at all.

And last, but certainly not least, don’t forget the HST. If your sole proprietor or partnership gross revenue is exceeding $30,000 a year, you’ll also have to file a HST return once a year, usually when you send in your income tax return.

If you haven’t filed already, what is stopping you?

Some common reasons we hear about are lost receipts, unorganized books, or contractors knowing they won’t be able to pay.

Whatever the reason, there is a solution – and it’s not avoiding the problem.

If you don’t have receipts, retrace your steps. There might be receipts that have been emailed to you, or you may be able to get duplicate copies from the providers if you have a record of the transaction in your bank account. And there are some expenses you might not need receipts for. A qualified financial professional can help you know what is needed.

If your books are unorganized, look for help. A qualified financial professional can help you find a more sustainable system.

If you know you can’t pay, then you need to start looking at debt consolidation options. Again, that would be something a qualified financial professional could help you explore.

In any case, you don’t want to bury your head in the sand. That will only make the situation worse and leave you in financial disrepair. Not only will you have to deal with late-filing penalties and interest, but it could also lead to CRA collections action, such as a frozen bank account, contacting your clients and telling them to send payments directly to the CRA, or even court action.

Don’t miss the 2018 tax deadline. If you’re in a tight spot, DebtCare Canada can provide financial guidance to help you out.

Call us today for a free consultation: 1 (888) 890-0888.