Thousands Of Canadian Taxpayers File Late. What Can They Do?

Another tax season has come and gone. Are you one of the thousands of Canadian taxpayers who owe and have not filed their 2012 tax return by the April 30th deadline? The late penalty CRA can assess is 5% + 1% per month, yes per month not annual, of the balance owing that the is return is late. But take heart; there is some relief for you out there.

Unless you are self-employed or deceased, the filing deadline for your 2012 personal income tax return was mid-night April 30, 2013. Self-employed individuals have until June 15, 2013 to file their 2012 T1. But payment of any balance owing was due April 30, 2013. For deceased individuals the filing deadline is dependent on the date of death, a topic for another blog on its own.

When one of the following types of situations prevents a taxpayer from meeting one of their civil obligations, the Minister of Revenue has the authority to grant relief from late filing penalty or interest. The situations include;

• Extraordinary circumstances;
• Actions of the Canada Revenue Agency;
• Inability to pay or sever financial hardship;
• Other circumstances.

Extraordinary Circumstances:

When situations exist that the taxpayer cannot control, they are entitled to having the late penalty, and/or interest waived. Examples of extraordinary circumstances that may prevent a taxpayer from complying with their tax obligations include, but not limited to, the following:

• Natural or human made natural disasters, such as fire or floods;
• Civil disturbances or disruption in services, such as a postal strike;
• Serious illness, or accident;
• Serious emotional or mental distress, such as a death in the taxpayers immediate family.

Actions of CRA:

When the actions of the Canada Revenue Agency, result in penalty or interest to be assessed, you are entitled to apply to have them waived. Examples of CRA actions that may prevent a taxpayer from complying with their obligations include, but not limited to, the following:

• Processing delays that result in taxpayers not being informed in a timely manner of an amount owing;
• Computer system crashing;
• Incorrect or misleading information, or materials, that leads to a filing basis on incorrect information;
• Processing errors;
• Delays in providing information, which leads a taxpayer to need being able to meet their tax obligations in a timely manner.
• Undue delays in resolving an objection or an appeal, or in completing an audit.

Inability To Pay or Financial Hardship:

In some limited circumstances where there is a confirmed inability to pay an owing assessment, the CRA may waive in whole or part the assessed penalty and/or interest to enable a taxpayer to pay their account. This could occur when:

• The interest charge represents a significant portion of the payment resulting in the taxpayer unable to conclude a payment arrangement;
• If payment of accumulated interest would cause a prolonged inability to provided basic necessities;

Generally consideration to waive all of part of the penalty or interest on inability to pay grounds is not granted, unless extraordinary circumstances prevented compliance, or an exceptional situation exits. If the enforcement of such penalty would jeopardize the continuity of a business’s operations, the jobs of a business’ work force, the welfare of the entire community as a whole, consideration may be given to waiving part or the entire penalty.

To apply for relief, CRA suggests that a taxpayer files form RC4288, which is available on their website, www.cra.gc.ca, with their tax center. You do not have to use Form RC4288, Request for Taxpayer Relief. The Canada Revenue Agency will not deny a relief request because a taxpayer did not use this form. If you do not use Form RC4288 to submit a request for penalty relief, mark “Taxpayer Relief” on your correspondence.

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For assistance with form RC4288, or any other accounting or tax relayed situation, visit www.jmjaccounting-tax.ca or call 519.690.0802