Well, actually, you were supposed to pay them a while ago (April 30), but your actual return must be filed soon. If you are self employed, or own a corporation, keep reading.
Self Employed
For those of you who have decided that the best kind of employee is yourself, be aware that the deadline for filing your 2012 tax return is fast approaching. So if you are an independent IT consultant to the government, a real-estate agent, or a consultant, this applies to you.
The CRA requires you to file before midnight on June 17. If you owe the CRA money (as opposed to receiving a refund), your payment was due back on April 30. But of course, that doesn’t apply to you right? You called your trusted advisors at Al-Mulla CPAs back in January to get all your financial affairs in order right?? In the off chance that you did not, you’re looking at some late-filing penalties and interest charges. These can be minimized by filing and paying any taxes owing ASAP.
The price for late filing is high. You are assessed a penalty of 5% of the balance owing, plus 1% per full month the return is late. The penalty will double on a second occurrence. Ouch!
Corporations
All resident Canadian corporations (meaning the corporation is a resident of Canada for tax purposes) must file a corporation income tax return to the CRA no later than 6 months after the end of your fiscal year. Many small businesses choose December 31 as their year end to coincide with the calendar year. This makes the due date June 30, 2013 for your 2012 return.
What is the damage if you miss the deadline? Similar to individuals, corporations are dinged with a penalty based on the amount they owe to the CRA. 5% of the amount owing for filing late, and an extra 1% for each month the return is late, to a maximum of 12. Things get much worse if you failed to file for several years in a row. The penalties go up to 10% for late filing, plus 2% per month (capped at 20 months).
HST
Both self-employed individuals and corporations often collect HST on sales and services. This also needs to be remitted to the CRA in a timely manner. HST is a bit different however. Depending on your level of sales, the CRA requires you to remit HST and file an HST return either monthly, quarterly, or annually. This is referred to as your “reporting period”. Here are the particulars:
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$1.5M in sales or less requires an annual reporting period (with optional reporting monthly or quarterly. But that’s just more work)
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$1.5M-$6M in sales? Quarterly remittances are required (with optional quarterly reporting).
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> $6M in sales will necessitate monthly remittances.
Our firm deals mostly with small business clients falling into the under $1.5M category. In this case, you must remit HST annually, with the due date being 3 months after the end of your reporting period. Again, the most common year end is December 31. This makes the due date for HST filing March 31.
But wait! There is an important exception. If you are self-employed, file HST annually, and have a December 31 year end (the most common scenario), then your HST payment is due by April 30, but you have until June 17 to file your actual return (same as for your income tax).
Confused? Did you stop reading at the first use of the “CRA” acronym? Not to worry. Contact your Ottawa Accountants or call us today at 1-855-256-8552 for a free consultation.
Zaid Al-Mulla, MAcc, CPA, CA
zaid.almulla@almullacas.com
