Missing The Tax Deadline Could Cost You More Than Your COVID Benefits, CRA Says

How will missing the deadline impact me?

All three of the programs the CRA has warned about require applicants to have earned at least $5,000 in 2019, 2020 or in the 12 months before you applied for aid.

The CRA will need to see your income tax return to verify your eligibility for those programs.

But there are other benefits that may be interrupted by filing your tax return late such as the Canada child benefit, the GST/HST credit and any other related provincial or territorial benefits.

If you end up owing money on your return this year, the CRA will start to charge you a compound daily interest fee on the outstanding balance starting on May 1. There’s also a late-filing penalty of 5% of what you owe, and another 1% charge for every month your return is late up to a maximum of 12 months.

On top of that, filing your taxes late or having an outstanding balance of unpaid taxes can also hurt your credit score.

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Tax professionals call on Ottawa to extend deadline

For many taxpayers and tax professionals, the Apr. 30 deadline feels nearly impossible to meet.

Tax professionals are struggling to keep up with demand to process returns virtually.

One independent tax consultant in Vancouver, Hugh Woolley, created a petition on Change.org to extend the federal tax deadline to June 15. The petition has received more than 75,000 signatures.

“With one week left in tax preparation season, we will continue to plead with the government for some sort of short filing extension or at least an automatic waiver of penalties and interest for those that file by June 15th,” he wrote on the petition page last week.

Don’t bank on a deadline extension

While the tax deadline was extended last year due to the pandemic, it’s unlikely the government will offer a grace period again this year.

For its part, the CRA says issuing an extension would “risk interrupting essential credit and benefit payments for millions of Canadians; payments on which thousands of Canadians rely.”

The CRA has said on-time returns can be processed within three to five business days. But if you’re one of the 10% of Canadians who file paper returns, your forms can take up to 10 to 12 weeks to process.

And if the tax agency needs more information (like proof you made at least $5,000 to qualify for pandemic benefits), your return could take up to eight weeks to be processed after they receive that documentation.

You can avoid these delays by filing electronically through a reliable tax software program.

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What to do if you need money now

If money is tight right now and you're not looking at getting a tax refund this year, you have a few options to boost your budget.

• Work on your credit score. Download an app that can help you raise your credit score by offering helpful advice, coaching you on money matters in other areas of your and that rewards you with free Bitcoin.

• Borrow at a rate you can afford. Taking out a personal loan can help alleviate some financial stress. There are sites that make it easy to compare and get pre-approved in 5 minutes.

• Earn a little extra. Have a special talent or hobby? Why not turn what you love to do into a profitable side hustle. If that’s not your thing, you can download a cash back app that pays you in cold hard cash when you shop at some of Canada’s top stores.

• Invest in your future. Even if you don’t have a lot of experience investing or a lot of money to spare, you sign up for an account with no minimum balances that does the work for you. Invest what you can spare and you’ll soon have a portfolio that works for you.