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Hi, welcome to another edition of Aspergillus CPA. Today we’re talking about tax filing deadlines. I have a y’all wait here with me again. So y’all, wait, how was your trip in and minus 30
today? Oh, US so bad. Just like you get to Carpool with someone. Excellent.
So the, uh, the quote that I have here today is drawn from Jim Collins. You know, author of a good degree. Well, my favorite books is you must maintain unwavering faith that you can and will prevail in the end regardless of the difficulties. And, and here’s the big one. And at the same time have the discipline to confront the most brutal facts of your current reality, whatever they may be. So the statistic is, you know, 50% of all businesses are at a business in five years. In 29% of them, of those failed ones are out of business because they ran out of cash. Hire a CFO Edmonton, so the, the stories we have business owners in their proverbial head in the sand and are, they’re short on cash and they think that you don’t delaying filing their taxes. You don’t have to deal with constraint, cashflow will end up, you know, making their cash flow better when really it’s going to actually make it worse. Um, so it’s, you know, it’s really, uh, becomes to be a problem there. They’re avoiding filing your taxes. So y’all all, what do you think are the questions that these business owners should be asking?
Okay. Hire a CFO Edmonton, well first of all, what are the penalties? Filing, personal and corporate tax late for one time and multiple times.
So it’s third. Totally. Let’s start with the one time. So if you’re late filing your personal or corporate taxes, it’s, it’s 5% of the balance only. Okay. Plus 1% a month. Okay. Hire a CFO Edmonton, so it’s 5% of the balance of one plus 1% a month. Hire a CFO Edmonton, then if you’re late multiple times, so the second time, so you’re late and let’s say you have a file for two years now. So now the first time I was going to be that 5%, the year one is going to be 5% a month for a number of months in the second time, even though this is your first time filing, because you’re two years behind, your second year too then is going to be penalize at 10% of the bounds only plus 2% per month for every month until you file. So it starts to add up in a real hurry. So,
okay. Uh, what is the interest charge on the outstanding balances?
The interest, which is in addition to the penalty. So they’re going to charge you interest, uh, recently went up from 5% to 6% here. Um, so the interests are going to charge you anything outstanding balance is 6% a year. Um, that’s the, that’s a, these interest rate right now. It does change from time to time, usually kind of in conjunction with as prime rate rises. Uh, but uh, yeah, it’s 6% currently. Okay. Um, why should you file on time even if you don’t have the money to pay? So here’s the thing, you’re, you’re, you’re going to pay the interest no matter what the interest is. It from the date of filing the interest is from the date you should have paid the taxes to begin with. So put that out of your consideration. The, the, you’re gonna pay the same amount of interest, but you can completely avoid the filing penalty by filing on time.
So even if you don’t have the money to pay, you can file, they’re going to start talking to an interest, which they would do retroactively anyways. It’s not going to change the amount of interest, but it can completely eliminate the penalty. So you don’t have the money to file that. You don’t have the money to pay. So you file your ears have the same interest anyway. We’ve completely avoided the penalty, which often can be substantially more than the interest. Even just the penalties, 5% right away, right from day one. It’s not 5% over the year. It’s 5% overnight. As soon as you’re late, whereas the rate of interest is 6% over the full course of the year. Um, you know, or you know, filing late the second time is 10% plus 2%. Every month those rates are astronomical, right? So, Hire a CFO Edmonton, you know, even if you don’t have the money file, get rid of those penalties, those are the significant balances. And then just realize that that interest is the same whether I filed late later, not so great.
Um, well personal taxes out, what are the two dates that personal taxes are normally required to be filed by?
So normally if you’re going to file your personal taxes and most everybody has an April 30th deadline, except people with an unincorporated business, they had a file by June 15th. So if your self or your spells has an unincorporated business, uh, you can actually wait until June 15th to file. Hire a CFO Edmonton, the sectors you can interest from the tax at April 30th regardless, but you, you’re not subject to any penalties if you have an unincorporated business, uh, which you file your personal tax return on June 15th. So April 30th for most people. So you’ve, you have a corporation April 30th for if you have an unincorporated, if your April 30th, if you have a corporation or if your regular taxpayer and June 15th if you have a proprietorship unincorporated business.
Okay. Um, how can the proprietorship filing deadline be a planning opportunity?
Well, sometimes the, the, the thresholds for having a proprietorship is quite low. I mean, did I shovel the driveway this year? Hire a CFO Edmonton, and earn 50 bucks. Is that a proprietorship know how significant is this penalty? Did we have any revenue that flew in out after we get into a little bit of a gray area, but you know, it, you know, it’s not the significance that changes the deadline from April 30th to June 15th is, is did you meet the minimal thresholds and all where you were conducting your business for profit and loss? Did you have any revenue from this thing? Hire a CFO Edmonton, so sometimes getting into that June 15 filing deadline is maybe a little easier than people think. Okay.
Um, when is the deadline for filing corporate taxes?
So your corporate taxes are due six months after your year end. So if you have a December a year and your corporate taxes or June, June 30th, if you have a January a year end, you’re a corporate taxes are due July 31st. If you have a February year end year of corporate taxes are due August 31st. So it’s always six months after the year. Hire a CFO Edmonton, you know, the, the interests on the taxes, there’s two crew at three months. Usually on the corporate taxes you have to pay in monthly installments anyways. But anything in addition to those monthly installments, the interest, uh, interest tax on it three months. But again, the interest of small, the penalties are big. Um, if you’ve never filed before, how can the right year end gate reduce penalties? So if you have a corporation, you know, people come to us and say they’re, they’re uh, they’re 20 months into their business.
But let’s say the first, you know, 10 months there was no profits. So we know we’re late, we’re going to have to file one year late. But we haven’t said a year end date yet because you set your year end that some people think that their year end set when they incorporate or when they call up and get that GST number the first time. That’s not true. So you’re, you’re in is that when you file your first corporate tax return? So yeah, if you haven’t filed yet, and this is your first time around, you know, when we can look at what was the period that you didn’t make any money and we make that you’re, you’re in number one because then we’re, the penalty is going to be based on the balance owing. So if you didn’t make any money, it’s, you know, it’s, it can be 5% of zero is still zero.
Right. Hire a CFO Edmonton, so lots of times you can strategize, you know, when you’re reached profitability in picking that year in to kind of eliminate any penalties that would otherwise be due. Okay. Hire a CFO Edmonton, what are the GST filing deadlines and how does it relate to the corporate deadline? Oh my goodness. So this is my pet peeve. If someone is out there with the federal government right now, and if you’re listening to this, you know, your corporate taxes are due six months after year end. If you are a small business corporation, you have less than one point $5 million in revenue, you’re able to be an annual filer for GST. But someone in their infinite wisdom at Cra has said that even though you can file your corporation, uh, six months after the end of the fiscal year, some reason you have to file your GST return three months after the year end, but it’s impossible to file your GST return doing pretty much the same work that you have to do to follow your corporate era.
So, uh, and there’s a whole team of people and thousands and millions of tax dollars that go into calling business owners up after, you know, three months and five days to wonder why they’re not done. They’re GST return. Well, they haven’t had to file it, their corporate tax return for it until six months. So if someone’s out there some way and wants to make a unlimited, a whole bunch of waste in our federal government to the CRA, and this is my chance to rant on this topic, is make those deadlines align. You should have to follow your GST a year end and your corporate tax year end at the same time. If you’re a small business corporation, lesson one point $5 million and the rent right there, what is voluntary disclosure and how can this be used to reduce penalties? Okay, so you’re offside, you know you’re off side.
But Siri doesn’t know yet. And I mean they don’t know. They haven’t sent you a letter. Cause if they’ve sent you a letter or you know, they’ve requested that you file, it’s too late, but they don’t know and you do and you’re worried that they’re going to find out. So there’s something called voluntary disclosure that we can often use to say that, hey, look, we’re wrong. We’re late here. Um, but we’re coming to you rather than you coming to us. So would you please accept this? And, uh, you know, we’ll, we’ll pay the interest. You’re always gonna have to pay the interest. Don’t try to get around that by delaying, you’re always going to pay the interest. But we’re coming to you, uh, before you found out. So can you get rid of the penalties? And again, those penalties are often bigger than the interest.
So that’s the key. You’re going to pay the same interest regardless of you filed the day after, you know, within one day or 10 years late, you’re going to pay the same amount of interest in the only thing you can effect as the penalties. So, and often with a voluntary disclosure, if it’s a filing that, uh, you know, they’re not chasing you for yet and you’re willing to come clean on, we can get rid of those penalties by filing them the voluntary disclosure program. Okay. Hire a CFO Edmonton, what sort of payment plans can be made for GST, personal and corporate? A rear. Okay. So a GST is a little trickier because they viewed GST is a trust account. It wasn’t your money to begin with. You know, you had to collect an extra 5% or above what you’re normally charge the customer. Um, you know, of course you get to deduct any, any GST that you spent and in delivering that product or service.
But, um, you know, ultimately they viewed it as a trust account. So the default for them is three months. They say it’s a trust account. You know, you can’t get longer payment terms, but, uh, you’re going to have to jump through some hoops to get any longer than three months. And that can be an uphill battle to get any payment plan for longer than three months. When it comes to personal or corporate arrears. Generally we can get six months and generally we can get six months without too many hoops. You know, that deadline is always changing. I don’t make the policies at Cra, but you know, getting a, a payment plan on six months on their purse for arrears, personal tax or, or rears corporate tax, you know, six months is, is generally a easy enough to, uh, to get, uh, because they, they have a little more flexibility because they realize that people don’t always truly understand their, their personal tax and corporate tax liability because it’s based on the income.
And they’re not sure how much income they should had a until the end of the year, whereas opposed to GST, they know you’ve been collecting more of that balance each and ever more than what you charge for your product, your service on each and every transaction. So they think that you should have that money aside. But personal and corporate taxes, um, they take it a little bit lighter and I don’t want anyone to think that they take it lightly, but generally we can get six months of a payment plan. We could always get longer. Hire a CFO Edmonton, I shouldn’t say always there. There’s always the potential to get longer, but it can be an uphill battle and there’s some early, some hoops that you’re going to have to jump through. You know, real significant disclosure, turning all of your bank statements over business and personal, uh, to, you know, try to get longer payment terms.
Hire a CFO Edmonton, but it can be done. So there is a light at the end of the tunnel. You know, the most important message is to know is that you start making it better. As soon as you eat, as soon as you file, you never filing does not affect the amount of interest you pay. The amount of interest you pay in the end is always going to be the same. Just the quicker you file, the less penalties you’re going to pay in. Those penalties are usually more significant than the interest. And sometimes you can get completely out of them. I just, by filing on time or filing before they come looking for you. So I think that’s what we have here today. You know, thanks again for joining us. You know, please hit that like and subscribe button. Uh, so we can continue to give you tips on how to beat the odds of business. And, uh, it’s always, you have any questions, put them in the comments below and we’ll address them in future videos. Thanks very much.
