Evelyn Jacks: File a tax return ó even if you canít pay

The tax-filing deadline is midnight April 30 ó unless you are self-employed, in which case the deadline is midnight June 15. But even if you qualify for the June 15 deadline, you still have to pay the Canada Revenue Agency (CRA) any amount owing on your 2011 taxes by April 30.

So, filing by April 30 is the best and only way to avoid expensive late-filing penalties on this year's taxes. The CRA charges a penalty of 5% of the unpaid balance plus 1% for each full month the amount remains unpaid to a maximum of 12 months. The penalty is higher if you repeatedly file late.

Nor does it pay to use the CRA to bankroll accumulating unpaid taxes: it charges interest on the amount owing based on the "prescribed rateî of interest, set quarterly by the CRA, plus 4%. This interest compounds daily ó it can add up quickly.

So, if you have savings, cashing out to pay overdue taxes could pay off. But seek the advice of your tax and financial advisory team before you take action. From a tax planning point of view, you will want to tap into tax-paid savings such as a guaranteed investment certificates or Tax-Free Savings Accounts before withdrawing money from your RRSP or RRIF ó that will only result in a tax liability next year.

What happens if you can't pay? If your balance is not paid within 30 days of the receipt of your Notice of Assessment or Reassessment, you will receive a letter or a phone call from the CRA. This is your opportunity to arrange a payment schedule with the CRA. If the CRA is satisfied you have exhausted all other means of paying ó cashing in savings, borrowing or arranging lines of credit ó it will work with you. Speak to a payment agent or ask your tax advisor do so for you.

Promptly clearing up your bill with the CRA is to your advantage. Indeed, interest will be charged on the outstanding balances but you'll avoid receiving what the CRA calls the "final letter.î This will advise you that if you don't make arrangements that are satisfactory to the CRA within 90 days of the Notice of Assessment, the CRA can take legal action, such as garnishing your income or directing a sheriff to seize and sell assets.