The 2023 Canada Tax Deadline | What Happens If You Miss it?

March 8, 2023 Andrew AdolphAudits

The Canada tax deadline is on April 30th. Perhaps you don’t plan on filing on time or at all. Regardless of what you’re going to do, here’s what could happen if you are required to, but don’t file on time.  

Who Must File an Income Tax Return 

The basic rule is you must file an income tax return if you have tax payable or if CRA requests you to file one. Even if you do not have tax payable, the CRA would LIKE you to file a return before the Canada tax deadline, and they have ways of enticing people to file tax returns.

How The CRA Gets People To File

The CRA has a few tricks up their sleeves. One of them is having employees pay slightly more income tax than they needed to during a year so that they have to file an income tax return to get a refund.  

Another way is the tax credits they sprinkle on people; you have to file to get those as well. The provinces are outsourcing the paying of its rebates to CRA, so you have to file a tax return. 

Another Sneaky Way The CRA Gets You To File

A relatively new feature is requiring a tax return to be filed if you want the gain on the sale of your residence to be tax-free. It wasn’t until very recently that the CRA began tracking house sales. If you are lucky enough to sell your house at a profit and want that profit to be tax free, you must file a tax return, even if otherwise you would have no tax payable.  

 In other words, if you sold your house, you had better file an income tax return in order to avoid a penalty. 

Late Penalties Start at 5% and go up to 34% 

As a Canadian citizen, you are required to file your taxes before the Canada tax deadline on April 30th. If you fail to file by April 30th, you will be required to pay a penalty equal to 5% of the tax that was payable on that tax return. 

For every full month that goes unfiled, an extra 1% is added, up to 12 months, at which point it is capped at 17%. And these penalties are for people who have missed the Canada tax deadline once or twice, and not multiple times. 

Double Penalties for Habitual Late Filers 

The CRA doesn’t like it when they have to regularly nag someone to file before the Canada tax deadline. If they put you on their Habitual Late list, after two lates, the penalties double. For example, instead of paying a 5% penalty, the individual would have to pay a 10 percent penalty and an additional 2% penalty for every month they’re late, to a maximum of 34%. 

If you own a business and are wondering if you can write this off, none of this expense is deductible as a business expense.  

You Can Get An Exemption?

Yes, you may be able to get a waiver of penalties and/or interest if you can show the reasons for being late were beyond your control. Criteria include: 

• extraordinary circumstances; 
• actions of the CRA; 
• inability to pay or financial hardship; 
• other circumstances. 

Filing May Uncover Unclaimed Treasures 

If you haven’t filed an income tax return in a while, you may find that when you do, you receive money BACK from the government. Things like GST credit, Climate Action Tax credit, and other government goodies. Every time there is an election at the federal or provincial level, there is usually some goodie that gets sprinkled that involves people receiving money from the government. The only catch is that you must file an income tax return to get them. You might even have uncashed government cheques! 

The Canada Tax Deadline: Bottom Line 

April 30th will be here sooner than we think and the Canada tax deadline is nothing to trifle with. If you are required to file a tax return for the 2022 taxation year, make sure that your tax return is filed on time. Late penalties can be severe and are not tax deductible.  

Should you need additional help or want advice from a tax expert, contact us today or book a free consultation or visit our blog for more info! 

Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.