Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Once you begin your business, plenty of questions will occupy your mind, a typical situation for any start-up. Among all them, prioritize discovering the answers to the questions that will directly affect your business finances.
In this article, let us introduce you to the basic but essential information about the Canada Revenue Agency (CRA), taxes, and penalties when you do not pay.
What Is the CRA?
The CRA is the department responsible for collecting taxes from individuals and businesses in Canada. They are the law-enforcing body ensuring that everyone religiously follows the country’s tax act so that the government will have funds for their projects. The CRA is also tasked to go after individuals and corporations not paying taxes on time or at all.
What Happens If I Don’t Pay My Revenue Canada Income Tax?
So, you must be thinking, “What happens if I don’t pay my taxes?”
Here’s a straightforward answer: if you do not pay your taxes, the CRA will come after you, and these are some of the things they can do.
- Seize assets
- Seize bank accounts
- Deduct wages
- Take your home as collateral
- Impose interest rates on your tax debt
Although the CRA strictly imposes these penalties, you can set up a meeting with them if the tax debt is beyond your capacity to pay at the moment. Create payment arrangements that will not hinder you from supporting your cost of living while still paying your taxes.
Some of the deals you can have with the CRA are the following:
- File bankruptcy
- Pay your tax debt in installments
- Request to reduce penalties and charges
- Request to cancel or waive penalties and charges
- Get COVID-19 interest relief
During the meeting, ensure that you inform them of your financial situation to get an arrangement that is fair to the government and yourself.
What Should I Do to Avoid Penalties?
Avoid being in this situation again or ever by following these suggestions.
- Remember by heart that April 30 is Canada’s tax deadline, so compute all your dues even before the said date, and pay ahead, too.
- Know about the revenue Canada income tax brackets to pay the exact tax due.
- Familiarize yourself with the revenue Canada Income Tax Act.
- Be aware of the revenue Canada income tax return penalties above so that you’ll be motivated to pay early.
- Seek help from online accounting solutions to track all business finances so that when tax season comes, you are prepared with all the data you need.
- Accountants can also assist you with income tax compliance. These professionals know the law, so they can caution you about tax payment red flags and correct your practices.
Paying taxes is a bit complicated, but familiarizing yourself with the laws and working with trained professionals will make the task less of a burden.
These are the answers to some basic tax questions you may have as a business owner. As you grow your business and hire more individuals to work for you, you will also be in charge of paying for their taxes, but that will be the next step. For now, keep in mind these facts so that you can steer clear of penalties and avoid drowning in tax debt.It would also help to have a trained bookkeeper to assist you with basic income tax preparation. We at Unloop can help you with this. Give us a call so that we can discuss all our offers with you.