Canadian Income Tax Filing and Payment Deadlines

Posted on Apr 30, 2024 in Language

Filing Deadlines

Individuals

Individuals must file their tax returns on or before April 30th of the following year. If the individual or their spouse carried on a business, the deadline is extended to June 15th.

Corporations

Corporations must file their tax returns within six months from the end of the taxation year.

Deceased Persons

The tax return for the year in which an individual died is due on or before the later of:

  • Six months after the day of death
  • The day the return would otherwise be due (April 30th or June 15th, if the deceased or their spouse carried on a business)

Trusts

Trusts must file their tax returns within 90 days from the end of the taxation year.

Backdating

Backdating a document constitutes a false statement or omission and is subject to penalties.

Penalty

The penalty for backdating is the greater of:

  • $100
  • 50% of the difference in tax liability (ITA: 163(1))

Additional penalties may include:

  • A fine of 50% to 200% of the evaded tax amount
  • Imprisonment for up to two years (ITA: 238(1))

Both the tax planner and the individual involved are subject to fines and penalties. The individual may also face disciplinary measures from their professional accounting association and could be liable for the civil penalty imposed on third parties for false statements (ITA: 163.2).

Offences and Penalties

Late-Filed Tax Returns

  • First Offence: Balance of tax owing x 5% + 1% for each complete month late (maximum 17%)
  • Repeat Offender: Balance of tax owing x 10% + 2% for each complete month late (maximum 50%)

Under-Reporting Income

  • Knowingly or Gross Negligence: Minimum $100; Maximum = Increase in tax liability x 50%
  • Repeat Offender: Income not reported x 10%

Late or Deficient Instalments

Penalty = [Interest charged – greater of (a) $1,000 and (b) 25% of interest that would have been charged] x 50%

Third-Party Civil Penalties

  • Planner: Minimum $1,000; Maximum = Fee charged for the planning
  • Preparer: Minimum $1,000; Maximum = $100,000 + Fee charged (limited to 50% x tax on unreported income)

Payment of Criminal Penalties

  • Individuals: April 30th
  • Corporations: 2 months after year-end
  • CCPCs (claiming SBD): 3 months after year-end
  • Trusts: Same due date as trust return

Income Tax Instalments (Individuals)

Instalments are required if the previous year’s tax liabilities were above $3,000 and there appears to be no withholding tax from employment income.

Regulation 5300 allows the CRA to permit deductions from the instalment base if there were withholding taxes (Form 1033-WS for allowable deductions).

Payment Due Dates

Payments are due on the 15th of March, June, September, and December.

Options for Payment

  1. Prior Year: 1/4 of the instalment base (taxes payable for the immediately preceding year)
  2. Current Year: 1/4 of estimated tax payable for the current year
  3. Combined:
    • March and June instalments: 1/4 of the instalment base for the second preceding year
    • September and December instalments: 1/2 x (excess of instalment base for the preceding year – 1/2 instalment base of the 2nd preceding year)

Penalty on Late Instalment Payments

The penalty is 50% of the interest payable, but it does not apply if the interest is less than $1,000.

Corporate Instalments

Private Corporations

Private corporations can reduce monthly instalments by 1/2 of their dividend refund on payment of dividends for the year.

Eligible CCPCs

Eligible CCPCs can make quarterly instalments due on the last day of each quarter of the CCPC’s taxation year. To be eligible, the corporation must meet the following criteria:

  • Taxable income (together with associated corporations) less than $500,000 (SBD)
  • Taxable capital employed in Canada for the current year less than a specified limit
  • SBD claimed in computing corporation income tax payable for the current or previous year
  • Perfect compliance history with no irregularities in tax remittance and filing returns

Options for Eligible Corporations

  1. Four instalments equal to 1/4 of estimated tax payable in the current year
  2. Four instalments equal to 1/4 of tax payable for the previous taxation year
    • First instalment: 1/4 of tax payable for the 2nd preceding year
    • Three instalments: 1/3 x (tax payable for the previous tax year – 1st instalment paid for the current year)

Non-Eligible CCPCs

Non-eligible CCPCs must make monthly instalment payments at the end of each month, usually based on the lowest of the following options:

  1. 1/12 of the estimated tax liability for the current year
  2. 1/12 of the instalment base (tax payable for the immediately preceding taxation year)
    • First two months: 1/12 of the instalment base for the second preceding taxation year
    • Remaining ten months: 1/10 of the instalment base for the immediately preceding taxation year, net of the amount paid in the first two months

If the total instalment payments are less than the actual tax payable and the amount that would have been paid under other options, the corporation will be subject to interest charges.

Note: The document provides a detailed example of calculating instalment payments and interest charges for both individuals and corporations. Please refer to the original text for specific calculations and scenarios.