Life hasn’t returned to normal yet; for better or worse, it probably never will. But despite all the changes in old habits we are weaning off with reluctance, life goes on, and the CRA is slated to collect taxes.
Late filing penalties for business owners
Besides your income tax return, owners of businesses, big or small, are expected to file payroll and GST/HST returns.
Unlike the income tax returns all due on the same date, deadlines for payroll and GST/HST returns and payments would have to depend on the fiscal year of your business. Please refer to your bookkeeper and accountant for details.
Failure to meet the payroll deadline or fulfill due obligation may subject you to fines up to $25,000 and 12 months of jail time. So, please, please, please, don’t roll the dice here.
As an employer, you’re also obligated to the CRA for reporting returns of your employees (T4s). Late filing will incur a penalty of $10 for each late day. If you have more than 50 employees, you will be assessed a much heavier penalty.
Payroll returns aside, you’re also responsible for filing GST/HST returns on time. Late filing penalty is calculated by the following formula: A+(BxC), where A is 1% of the GST/HST you owe, B is the 25% of A, and C is the number of months after the return is due.
E.g. you owe $2000 in sales tax, and your remittance is made 3months late. → A = 2000×1%=20; B=25%x20=$5; C=3; → your penalty is: 20+(5×3)=$35
Don’t ask me how the formula works, or why doesn’t CRA just impose a 2% penalty on all the amounts due. Whoever comes up with this formula needs to get a life. JK. The logic behind it is that the more and the longer you owe the CRA, the bigger the percentage becomes of your penalty. Don’t believe me? Try $5000.
If you struggle to keep track of your numbers, we recommend cloud accounting, using Intuit’s QuickBooks Online. As Intuit’s certified partner, Ke Wang offers systematic and comprehensive training to small businesses from setups to take-offs. For more information, please refer to QBO Training.