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Tag: filing taxes late

  • CRA Convictions – Yes, People Really are Prosecuted for Filing Taxes Late

    Yes, it’s true — CRA convictions are a real thing and they happen to average people across the country.

    When it comes to filing taxes late, tax debt, and tax evasion, the Canada Revenue Agency (CRA) has many measures at its disposal. This includes collection action — such as wage garnishments, freezing bank accounts, and placing liens on assets — but they can also prosecute when they choose.

    Here are some examples of average, everyday Canadians who ended up with CRA convictions:

    1.     A British Columbia lawyer failed to report $1,284,254.81 of taxable income for the 2005, 2006, 2007, and 2008 tax years. He was sentenced on January 10, 2019 to a 22-month conditional sentence, including eight months of house arrest. He was also fined $418,865.66 after pleading guilty to one count of tax evasion under the Income Tax Act.

    2.     An Ottawa resident was sentenced to a nine-month conditional sentence, including six months of house arrest, and a fine of $68,000 after failing to report net business and rental income totaling $410,148 for the years 2009 to 2013. He was also required to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    3.     A New Brunswick man pleaded guilty on June 10, 2019 to eight counts of tax evasion under the Income Tax Act. He was sentenced to a fine of $53,959. In addition, he will also have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    4.     The CRA seized six rental properties and an automobile belonging to two Ottawa residents charged with tax evasion. They were alleged to have underreported their income by $3,114,100 from January 2008 to December 2013, thereby evading $523,532 in federal income tax. The duo was arrested and then released with court-imposed conditions. 

    5.     A British Columbia land developer and builder was sentenced to pay a $23,100 fine after being found guilty on two counts of tax evasion and one count of making false statements under the Income Tax Act, and one count of GST/HST evasion under the Excise Tax Act.

    According to the CRA, for the five-year period of April 1, 2013 to March 31, 2018, the courts have convicted 307 taxpayers of tax evasion. This involved $134 million in federal tax evaded and court sentences totaling approximately $37 million in court fines and 2,964 months in jail.

    When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

    Tax evasion can be a slippery slope — you may fear filing taxes late or know you can’t pay, so you don’t file them at all, which can end up leading down an even worse path.

    If you do file taxes late, you may also be subject to CRA interest and late-filing penalties, which can add to the amount you owe.

    But there is a better option than filing late or not filing at all — work with a tax debt expert.

    At DebtCare Canada, we can help you deal with a tax debt situation. If you haven’t filed yet, or have filed but can’t pay, we provide access to one of the only programs that can resolve a CRA back tax problem.

     ·       Often your principal tax debt can be reduced.

    ·       Interest and penalties immediately stop.

    ·       Frozen bank accounts are unfrozen.

    ·       Wage garnishments are lifted.

    ·       Garnishments to customers are lifted.

    ·       You are able to make a single monthly payment.

    And you won’t be subject to CRA convictions!

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Missed the Tax Deadline? Read Our Complete Guide to CRA Penalties and Interest

    The 2018 personal tax filing deadline was April 30, 2018. Seeing as we’re now in August, if you missed it and you owe money, you’ve likely racked up Canada Revenue Agency (CRA) penalties and interest by now.

    Late-Filing Penalties and Interest

    According to the CRA, late-filing penalties and daily compound interest start accumulating on May 1, 2018 for any unpaid amounts owing for 2017. You could be charged:

    • 5%of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • 10% of your 2017 balance owing, plus 2% of your 2017 balance owing for each full month your return is late, up to a maximum of 20 months, if you’ve been charged a late-filing penalty on your return for 2014, 2015, or 2016.

    The above amounts are what you could be charged after filing your tax return late. However, if you decided to not file at all, the consequences could be even worse.

    Failure to Report Income Penalty

    If you fail to report an amount on your return for 2017, and you also failed to report for 2014, 2015, or 2016, you may have to pay a federal and provincial/territorial repeated failure to report income penalty.

    Any amount of income of $500 or more that was not reported is considered a failure to report income.

    These penalties are each 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 you failed to report.

    False Statements, Omissions, and Gross Negligence

    If you make a false statement or omission on your 2017 tax filing, you could be charged an additional penalty:

    • $100; and
    • 50% of the understated tax and/or the overstated credits related to the false statement or omission.

    This penalty can be charged whether you knew about the false statement, or if it is caused by “gross negligence,” for instance if you paid somebody else to file your return for you (like an accountant) and they made an error. Even if you pay somebody else, you are still responsible for the accuracy of your return.

    CRA Collections

    If you fail to pay an amount owing on your tax return, the CRA can begin collection action. This can be financially devastating, and publicly embarrassing. Common collection action includes a wage garnishment, a frozen bank account or putting liens on your assets.

    The CRA can begin collections without warning and without a court order. Once a collection action is in place, it becomes even harder to negotiate with the CRA. If the CRA has started collection action, time is not on your side. The only two things that can force a CRA collection action to stop (besides paying the debt in full) are filing for a consumer proposal or filing for bankruptcy.

    What to Do

    If you’re reading this blog, it’s possible that you’re several months behind on filing your tax return, or you haven’t yet paid back the amount you do owe. If this is the case, you don’t want to delay it any longer — that will just result in even more charges, CRA collections, and potential court action for tax evasion. But you don’t have to go it alone.

    You need an expert that can look at your whole financial picture and put together a plan that will work for you.

    At DebtCare Canada, we can help with your tax debt, whether it’s personal income tax, HST, or payroll. We provide access to one of the only programs that can resolve a CRA back tax problem.

    Contact us today for a free consultation. Call 1-888-890-0888.