Tax deadline looms
With just hours left until the filing deadline of midnight tonight, Canadians everywhere are scrambling to get their tax returns in under the wire.
Does anyone actually leave it this late?
I wouldn't have thought so but apparently, some people just can't get around to filing early. At a tax planning seminar I gave last night in Bridgewater, N.S., the woman sitting next to me sheepishly confessed that right after my presentation, she was heading straight to her sister's for help in preparing and filing her return. Talk about last minute.
If you or your spouse or partner are self-employed, you have an extra six weeks or so to file this year, until June 17. But even if you are one of those Canadians that have till mid-June to file, you should take the time today to do a quick estimate of any tax owing, perhaps by using a web-based tax preparation software package. You can then make an online banking payment to the Canada Revenue Agency before midnight to avoid being charged non-deductible arrears interest at the current prescribed rate of 5%, compounded daily.
The good news is that if you miss tonight's midnight deadline, you will only face a penalty if you actually owe money. The penalty starts at an automatic 5% of the balance owing if you are even one minute late. It then increases by 1% of the outstanding balance owing for each full month that your return is late, to a maximum of 12 months. Those penalties can double if you were subject to a late-filing penalty for any of the previous three tax years.
As a final reminder, April 30 (or June 17) is also the deadline to manually mail-in Form T1135 to report ownership of any foreign investment property if the total cost of that property was more than $100,000. That includes shares of non-resident corporations, even if held in a Canadian non-registered brokerage account but excludes a personal foreign vacation property.
The penalty for failing to file this form on time is $25 per day, to a maximum of $2,500. If you knowingly or under circumstances amounting to "gross negligence" fail to file the form, the penalty jumps to $500 for each month the form is not filed, to a maximum of 24 months.