Let’s take a brief look at some of the common filing options. Note that we’re talking about income tax only – GST/HST and payroll taxes have their own deadlines.
If you’re working for a company and receive a T4 form, you’re considered an employee. The filing deadline for employed individuals is April 30th. Note however that if you have a side-business (that is, any self-employed income that you would include on Schedule 2125 of your T1 tax return), you would fall into the “self-employed” category, even if you’ve been issued a T4.
If you are earning income personally (not through a corporation), then you are considered to be operating a sole proprietorship, ie. self-employed. The filing deadline for self-employed individuals is June 15th. The catch here however is that any taxes owing still need to be paid by April 30th.
For example, let’s say you earned $50,000 in 2013. This amount would be included on Schedule 2125 of your T1 personal tax return and your filing deadline would be June 15, 2014.
However, at this income level, suppose your taxes owing are $10,000. This $10,000 needs to be paid by April 30th to avoid any interest payments.The good news is that you will face no penalties for late filing if you get your taxes in on time (by June 15th of course).
While interest payments are not fun, it’s the late filing penalties that can really burn.
Visit the CRA website for a complete list of interest and late filing penalty amounts. To ensure that you avoid any additional costs, best to file and pay your taxes by April 30th.
In a general partnership between individuals, each member of the partnership records their share of the partnership income. Like a sole proprietorship, that amount is included on the partner’s Schedule 2125 of their T1 income tax return and the filing deadline is June 15th. Again, any balance owing must be paid by April 30th to avoid any interest charges.Note that while most partnerships will be considered general partnerships, there are more complex structures such as limited liability partnerships that come with their own set of filing requirements and deadlines.
Corporations have the ability to set their own fiscal year end dates. Once the year-end is set, you’ve got 6 months to file your corporate income tax return (T2) before it’s considered late.However, similar to the self-employed scenario above, interest begins to accrue before the filing deadline at 3 months after the fiscal year end.
So if your fiscal year-end is December 31, 2013, you’ve got until June 30th, 2014 to file your taxes but you’ll be charged some interest on any balance owing after March 31, 2014.
If you want to avoid any additional costs, best to start preparing your return well before the 3-month mark to get them in on time.
Remember - while the corporation deadline may be 6 months from the fiscal year-end date, as an employee of your own corporation you'll still need to file your personal tax return following the rules above.
Of course, there are exceptions to the above. Certain self-employed individuals can select a year-end other than December 31 by filing a T1139. If you don’t owe any tax, the consequences for missing a deadline may be minimal as interest and penalties are generally charged only if a balance is outstanding.
However, before you decide to put off your return, check with your accountant to make sure you’re in the clear!
Josh is the co-founder and CEO of LiveCA.