Coming Soon! Meet the Tax Filing Deadline for Proprietors

Midnight June 15 is the tax filing deadline for unincorporated business owners and their spouses, and the official end of tax season for those weary folks in the tax preparation industry! Don’t let this important deadline get lost in your pre-summer planning.

Failing to file and pay the taxes due on those revenues by June 15 will result in potentially expensive late filing penalties and of course, more interest. Here’s what that looks like: do file by midnight June 15 to avoid the 5% late filing penalty plus 1% per month on the outstanding balance for up to 12 months. If you are delinquent on paying for the second time within three years, that penalty goes up to 10% of the outstanding amount plus 2% per month for up to 20 months. 

If you have repeatedly failed to report income, in the current year or any of the three preceding years, you will pay a penalty of 10% on the amount you failed to report and 50% of the difference between the understated tax (or overstated credits) and the amount of taxes withheld on what you failed to report. This penalty is waived if the amounts are under 5%. Failing to report income or making a false statement can also result in a gross negligence penalty of up to 50% of the amount unreported or understated (or overstated in the case of credits). Interest on the balance owed—which can include CPP premiums payable—accrues on the remittances and penalties at the prescribed rate plus 4%, for a current total of 5%. Ouch!  And, by the way, that interest clock started ticking at one minute after midnight May 1, the 2017 regular tax filing deadline.

Compliance is, of course, the best strategy; and Voluntary Disclosures can be your best friend if you have made a mistake or omission—as long as you file before CRA taps you on the shoulder. Your DFA–Tax Services Specialist can help with the filings, and to negotiate a payment plan with the taxman if required. If you are an advisor looking to add value for your small business clients, or to expand your practice to include advisory services for unincorporated proprietorships, consider sharpening your skills by taking the Knowledge Bureau course designed specifically to help these clients: T1 Professional Tax Preparation–Proprietorships.

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