written on behalf of Feigenbaum Law
Close to a month ago, we wrote about the United States Internal Revenue Service’s decision to extend the filing deadline for Americans. We told our readers at that time that we would let them know if a similar extension would be offered to Canadians. A story published today by the CBC states that the Canada Revenue Agency has announced it will not extend the tax filing date for Canadians.
Accountants ask for an extension
The story quotes an accountant from Cowansville, Quebec, who said that accountants are having a difficult time preparing tax returns for their clients. The account, Geoffrey Webber, told CBC that the situation is not much different than it was last year when the CRA extended the tax deadline for individuals.
While people are back to work in much of the country, not all offices are open, and some major cities are still in lockdown. This means that a large number of accountants and tax professionals are working at home, which is a challenge for an industry that still relies heavily on physical paperwork.
Of course, accountants are not the only people working from home. Many of their clients are also taking longer than usual to get material to their accountants, creating a sort of snowball effect. This could be because the current tax season is a little more difficult than those in years past. In addition, people may not have access to photocopiers and printers which they would have normally accessed at work.
The tax deadline looms
Most Canadians have a tax return deadline of April 30. While people who expect to receive a refund can miss the deadline without penalty, those who owe money face financial penalties if the deadline is missed. If April 30 comes and goes, late filers will face a penalty of 5% of what they owe in addition to 1% for each month that goes by without a return being filed.
In addition, if someone has failed to meet the tax deadline in years past, they may be subject to a 10% penalty, plus 2% per month up to 20 months. The Financial Post recently reported on a Nova Scotia taxpayer who appeared in court to try to get the CRA to forgive about $40,000 in late-filing penalties assessed by the CRA after he failed to file a tax return on time from 2009 through 2015.
Even if someone expects a refund, missing the deadline may result in benefits provided through the CRA. Pamela Tourigny, a spokesperson for the CRA, told the CBC that “Extending filing deadlines this year would risk interrupting essential credit and benefit payments for millions of Canadians; payments on which thousands of Canadians rely.”
However, the CRA says is taking some measures to assist people. The agency announced in February that people who made less than $75,000 in 2020, or who received COVID-19 benefits, including the Canada Emergency Response Benefit (CERB) can have an additional year to pay any taxes owing without penalty. This measure likely comes as a relief to people who received CERB but did not hold back any money from the payments, which were taxable.
Contact our tax team for a custom solution to your personal tax planning needs. Our unparalleled knowledge of US and Canadian tax makes us leaders in this field. Contact us about making your transition across the border as smooth as possible. We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (416) 777-8433 or toll-free at (877) 275-4792.