What Happens When You File Business Taxes Late?

February 2, 2024
Gurdeep Sangha
what happens when i file business taxes late?

It’s never too late to file business taxes. In this article, we’ll cover the important things you need to know about a late business tax filing.

Table of Contents

Late business tax filing penalties and consequences

When it comes to corporate tax returns in Canada, meeting the filing deadline is crucial to avoid substantial penalties imposed by the Canada Revenue Agency (CRA). If a corporation fails to file its tax return within six months after the end of the taxation year, the CRA enforces a penalty. 

This penalty consists of 5% of the unpaid tax due on the filing deadline, plus an additional 1% of the unpaid tax for each complete month the return is overdue, capped at a maximum of 12 months.

However, the consequences escalate significantly if the CRA issues a demand to file the return, particularly when the corporation has previously incurred a failure-to-file penalty in any of the three preceding taxation years. In such instances, the penalty increases to 10% of the unpaid tax at the time the return was due, accompanied by an extra 2% of the unpaid tax for each full month of delay, with a maximum penalty duration extended to 20 months.

More information regarding the CRA business late filing penalty can be found on the Canadian government website.

Possibility of legal implications for not filing business taxes

Failure to file business taxes in Canada not only incurs financial penalties but also carries the potential for serious legal implications. If a corporation neglects repeated requests from the Canada Revenue Agency (CRA) to file its tax return, the CRA may resort to issuing an arbitrary assessment.

This arbitrary assessment often results in the imposition of taxes owed that could surpass what the actual assessment might have been.

Ignoring the arbitrary assessment may lead to further legal actions, such as the CRA garnisheeing the corporation’s bank account. In such a scenario, if the corporation eventually files the overdue tax return and is entitled to a refund, the CRA reserves the right to deny the refund.

This denial is explicitly outlined in subsection 164(1) of the Income Tax Act, especially for taxation years in which the return was filed more than three years late. 

Therefore, beyond financial consequences, the possibility of legal actions underscores the critical importance of complying with tax filing obligations to avert severe repercussions for businesses in Canada.

What to do when you need business tax help?

When faced with the need for business tax help, seeking assistance from a qualified business accountant is a necessary and effective step.

A reputable business accountant, such as Sansar Solutions, can provide valuable guidance on navigating the complexities of late business tax filings, regardless of how many years that need to file business taxes late.

How to prevent a late business tax filing

To prevent a late business tax filing, it’s crucial to take a proactive approach.

By combining the expertise of a business accountant with diligent accounting practices, you can proactively prevent late business tax filings and ensure compliance with regulatory requirements.

1. Speak with a business accountant to understand your tax obligations

Engage with a seasoned business accountant who can guide you through the intricacies of tax obligations and deadlines. Regular communication with your accountant ensures that you are aware of upcoming filing dates and can address any potential issues well in advance.

2. Stay on top of bookkeeping and accounting

Maintaining organized financial records throughout the year facilitates a smoother tax preparation process, reducing the likelihood of delays.

How to file late business taxes?

If you find yourself needing to file late business taxes, Sansar Solutions is here to guide you through the process.

Follow these steps to file your overdue business taxes with the assurance of a fast and accurate business tax filing service at one pre-agreed flat-rate:

Contact Sansar Solutions: Reach out to Sansar Solutions, a trusted business accountant, to discuss your situation. Schedule a consultation to provide details about your late filings and any challenges you may be facing.

Consultation and Assessment: During the consultation, we will assess your business’s tax situation, taking into account the number of years behind, outstanding liabilities, and any potential penalties.

Develop a Filing Strategy: Collaborate with our team to develop a personalized strategy for completing your late business tax filings. This may involve gathering necessary documentation, organizing financial records, and determining the most efficient way to catch up on filings.

Navigate Tax Regulations: Rely on our business accountants expertise to navigate relevant tax regulations and changes that may impact your filings. They will guide you through any updates in tax laws and ensure your filings comply with the latest requirements.

Regular Communication: Stay in regular communication with us to stay informed about any changes in tax laws or regulations that may impact your business. Proactive communication ensures that you can address issues promptly and avoid complications in the future.

By choosing our team of business accountants, you benefit from the expertise of us being there when you need business tax help, making the process of filing business taxes more manageable and ensuring compliance with regulatory requirements. 

Is it too late to file business taxes?

If you’ve missed the deadline for filing your business taxes, it’s not too late to take action. Reach out to a qualified tax professional or accountant, such as Sansar Solutions, to assess your specific situation and provide guidance on the best course of action.

Gather all necessary financial documents and file your business taxes as soon as possible to minimize potential penalties and interest. Address any outstanding tax liabilities by working with your tax professional to develop a plan, which may include setting up a payment arrangement with tax authorities.

Communication is key – if you foresee challenges in meeting deadlines, engage with the relevant tax authorities to explore any available extensions or accommodations. Staying informed about potential penalties for late filing will help you navigate the process effectively and work towards compliance with tax regulations.

Remember, taking proactive steps now can mitigate consequences and set your business on the path to financial health.

Late business tax filing Canada frequently asked questions

A late business tax filing occurs when a business fails to submit its required tax return by the designated deadline set by the relevant tax authorities, like the CRA (Canada Revenue Agency) for Canadian businesses.

Filing business taxes late can result in financial penalties, interest on unpaid taxes, and potential legal actions by tax authorities. It’s crucial to address late filings promptly to minimize consequences, and seeking the guidance of a tax professional can help navigate the process effectively.

When filing a small business late tax filing with Sansar Solutions, we guarantee any timeline, typically filing everything in less than 1-month.


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