Last updated: April 17 2019
With a little under two weeks until the April 30 filing deadline for individuals, tax filing season is in full swing. However, there is another upcoming date to think about: the June 17 filing deadline for proprietors. If there is a balance due, it’s best for all taxpayers to file and pay by April 30 in order to avoid interest costs.
A later filing deadline date of June 15 (this year it’s June 17, as June 15 falls on a Saturday) gives self-employed Canadians six more weeks to file their income tax. But balances due are still payable on April 30, which complicates the process. Should they pay without filing and knowing exactly how much they owe? This certainly can stop the interest clock.
But this can also lead to over-paying or under-paying the CRA, and there’s consequences associated with that. Over-paying means your money is tied up a bit longer with the CRA; under-paying or paying late attracts interest at a prescribed rate of 6%. Interest will start accumulating on May 1. That’s more than 45-days of daily compounded interest at 6% of overdue taxes that your client could be on the hook to pay come June 17th if they delay both filing and paying until this date.
If your client is owed a refund, they’ll wait that much longer to receive their money back. Also keep in mind, if an overpayment is made to the CRA prior to filing, they don’t pay interest on the money they owe you, until you do file, so it doesn’t pay to wait.
If late filing occurs because your client doesn’t have the money to pay their tax bill, advisors can help before the April 30 deadline and negotiate with the CRA collections department to set up payment arrangements. If the issue is disorganization, there is another solution.
Bookkeepers are an integral part in enabling a business to properly and accurately keep records, but they also play are part in ensuring self-employed Canadians are prepared to file on time. Properly kept and clean books throughout the business year will make for a much simpler time come year-end, and with an eye toward tax compliance, you can make tax filing time a simpler and less stressful time for your self-employed client. Be sure to introduce them to a DFA-Bookkeeping Services Specialist™ to help with 2019 books and records. This is the perfect time to make sure your client is starting the new year off on the right foot.
Additional educational resources: Want to learn how to ease the woes of year-end and tax season? The Bookkeeping for Small Businesses certificate course has been recently updated and provides graduates with the knowledge and skills to assist the family/small business owner with accurate data processing based on accounting principles and tax compliance throughout the evolving lifecycle of a business. Take a free trial today and register by June 15.
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