Income Tax FAQs
When is the due date for income taxes?
If your business is a sole proprietorship or partnership you have until June 15th to file. HOWEVER — even if you are not filing your taxes until June 15th, you are still required to pay any income tax due by April 30th*, to avoid income tax interest.
If your business is a corporation you can choose any date for your fiscal year end. If the corporation has a balance owing on its corporate income tax, for most corporations, that tax balance must be paid within three months after the fiscal year end to avoid interest charges. A late filing penalty will be applied by the government for corporate tax returns filed past six months after the fiscal year end.
Individual tax returns must be filed on or before April 30th each year. If you or your spouse/common-law partner carried on a business, your return must be filed on or before June 15th. However, if there is a balance owing it must be paid on or before April 30th*.
What happens if I don’t file my income tax on time?
If you do not file your return on time, your goods and services tax/harmonized sales tax (including any related provincial credits), Canada child benefit payments (including related provincial or territorial payments), and old age security benefit payments may be delayed or stopped.
Additionally, individual income tax filers (including sole proprietors and partners), who do not file their returns by the deadline and have a balance owing to the Canada Revenue Agency (CRA) will be subject to a late filing penalty, which is:
- 5% of your balance owing, plus;
- 1% of your balance owing for each month the return is late, up to a maximum of 12 months.
If you have already been charged the late-filing penalty in any of the three previous tax years the penalty increases to:
- 10% of your balance owing, plus;
- 2% of your balance owing for each month the return is late, up to a maximum of 20 months.
What happens if I can’t pay the income tax that I owe?
Even if you owe more taxes than you can pay by the deadline, you still need to file your return on time to avoid late-filing penalties.
Once the CRA has processed your income tax return, you will be sent a Notice of Assessment. If the Notice of Assessment shows an income tax balance owing that you are unable to pay immediately, you should contact a tax services office, which will help you set up a mutually acceptable payment schedule. It is important to let the CRA know about the issue and arrange a payment schedule as quickly as possible, as daily compound interest is charged on any unpaid income tax balance, beginning on the annual filing deadline and continuing until the income tax owed is paid in full.
If you are in a situation where you are unable to meet your tax obligations through financial hardship or extraordinary circumstances you may apply to the CRA to have penalties and interest waived or cancelled through the Taxpayer Relief Program. Circumstances that may be acceptable to the CRA for relief from penalties include serious illness, loss of employment, natural disasters, etc.