Are You Behind with CRA? 

Don’t Be Embarrassed, You Are Not Alone

 

 

Let’s make a guess... You have not filed your HST in 2 years, corporate taxes in 4 years, source (payroll) deductions are behind and CRA is starting to call.

Right?

Well, you are not the only small business owner in this predicament; in fact, CRA banks on it, making millions of dollars each year in interest and penalties.

But of course for you, being behind is causing tremendous amounts of stress, sleepless nights and likely relationship issues.

If this is describing your business and personal life, don’t be embarrassed as we see numerous business owners just like yourself each year.

The biggest issue with this scenario however, is that interest and penalties are piling up, even though you have not filed!

CRA is notorious for issuing arbitrary assessments, just making up numbers and demanding payment, and they are not subtle about it; they will garnish your bank accounts, your clients and make your life a living hell.

The best thing to do is to get your records caught up, make the proper filings and then talk to CRA about a payment plan.As for interest and penalties, here is what you are facing, and they compound DAILY.

 

Corporate Tax:

• 5% of the tax owing on the filing deadline, plus 1% of the tax owing for each additional month that you are late to a maximum of 12 months;
• If you receive a Demand to File notice, the penalty becomes 10% plus 2% for each month it is late to a maximum of 20 months.

 

GST / HST:

• 1% of the tax owing PLUS 25% of the tax owing times the number of months overdue to a maximum of 12 months;
• If you receive a demand to file, an additional $250 is added
• Arrears interest is calculated at 5% per annum.

 

Payroll Deductions:

• 3% of the tax owing if the remittance is 1 to 3 days late;
• 5% of the tax owing if it is 4 or 5 days late;
• 7% of the tax owing if it is 6 or 7 days late;
• 10% of the tax owing if it is more than 7 days late;
• Arrears interest is calculated at 5% per annum;
• If you are assessed a penalty more than once in a year, a 20% late remitting penalty will be applied to all subsequent late remittances.

 

As you can see, Payroll Deductions are the most sensitive taxes and you need to do everything possible to remit these on time.

In addition to late penalties and interest, repeated infractions will likely lead to Trust Audits (GST / Payroll) and sometimes Corporate Tax audits, although not as often.

Do you really want CRA at your door auditing your records?

There are other things to consider as well, especially Director’s Liability.

Did you know that if you do not remit the payroll deductions and / or GST, that you can be held PERSONALLY LIABLE for the amounts owing?

CRA can and will lien your home, vehicles and other personal assets to secure their interests.

As we enter into the New Year, perhaps it is time to get your business affairs in order.

CRA does not care that you have other financial obligations; the tax money is theirs, not yours and you have no right to use their money to run your business. It is that simple!

Do not feel embarrassed, we see situations like these every day.

Gather your documents, make an appointment to see your Local Ledgers Professional and get ahead of the CRA before they seize your bank accounts or worse.

 

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