May 1st and Canadian Income Tax Deadlines

Written by Posted On Monday, 24 April 2006 17:00

Canadians who are frantically completing their 2005 income tax returns in a mad dash to meet the April 30 filing deadline may not realize that they'll have a day's grace this year since the traditional date is a Sunday. Monday, May 1, 2006 is the last penalty-free day to send 2005 income tax monies to the Canada Revenue Agency (CRA), but that does not mean all income tax returns need to be filed by that date.

If the government owes you a refund, you may miss the filing deadline without penalty, however, taxpayers usually want to collect a refund as soon as possible. NETFILE may be the answer if you're looking for a short cut, especially if you use direct deposit -- or at least that's the way the CRA promotes it. Open from February 13 until September 30, the NETFILE transmission service combines convenient Internet filing with instant acknowledgment and removes the necessity for sending in 2005 receipts.

One downside of NETFILE is the requirement for first preparing the return using one of the commercial tax preparation software packages or Web applications certified for NETFILE. This necessity is offset by the variety of approved software and by free offerings from software vendors for those who qualify.

If you or your spouse or common-law partner are self-employed and carried on a business in 2005 (other than a business whose expenditures are primarily in connection with a tax shelter), the deadline for filing your 2005 return is June 15, 2006. However, you must still pay any balance owing by May 1 or face late charges. If you are not sure what you owe before completing your return, make the best estimate possible to avoid underpayment and send that in by the May 1 deadline. Any overpayment will be returned when the return is reviewed or notice will be sent to collect any outstanding balance.

If you aren't self-employed and you owe the government money, your payment must be received or postmarked on or before May 1 and your return filed at the same time.

Provinces and territories collect their income tax on the same return as the federal government, but each has slightly different taxation rates and rules, so be sure you have the correct form.

CRA offers each taxpayer an electronic connection called My Account which allows you access to your personal tax and benefit information 21 hours a day, 7 days a week. For instance, those who have bought a house or condominium using the Home Buyers' Plan (HBP) may examine their current HBP statement of account. Total RRSP withdrawals, previous annual repayments, cancellations and income inclusion, as well as the repayable balance remaining and the required repayment for the current year, are all readily available using My Account.

Select the text-based tutorial to learn about My Account or access the "Virtual tour (SWF)" for an active demonstration. This online service also enables you to examine a summary of 7 years of your tax returns and copies of 2 prior-year and your current returns, as well as checking your RRSP limit, unused contributions, contribution history and year-by-year calculations.

Even if you are missing information or must estimate funds due, file your return on time. The federal Income Tax Act and other laws provide a range of penalties for offences such as tax evasion, smuggling, failure to pay taxes, failure to disclose income or refusing to file a tax return. Individuals who fail to file a return as required, or who fail to comply with a court order to file, are liable to a fine of C$1,000 to C$25,000 and up to 12 months imprisonment -- and they still have to pay their unpaid taxes with interest. The Act gives the CRA powers to impose fines, make third-party claims, seize property and prosecute through the criminal process. On the other hand, taxpayers who come forward voluntarily without having been investigated are usually eligible to pay their overdue taxes or customs duty with interest but without any penalty.

Complaining to the CRA about income tax won't get you very far. The CRA administers and enforces tax laws passed by Parliament and provincial Legislative Assemblies, but has no power to impose new taxes, remove existing taxes, raise or lower taxes or decide how tax money will be spent once it is collected. If you want taxation change, contact your elected federal and provincial representatives.

Warning: The CRA does not use email to conduct "e-audits," nor does it notify taxpayers of pending audits by email. If you receive an e-mail using "Canada Revenue Agency e-audit" as the subject line or one that gives the impression that CRA sent it, DO NOT RESPOND. Do not provide your social insurance number (SIN), bank account numbers and other confidential information. The CRA requests you contact your tax services office if you receive such an email request.

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