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New deadline for income tax payments: September 30

If you owe income tax on your personal tax return or your personal tax return with self-employment/business earnings, your tax payments are due by September 30, 2020.

In March, the federal government announced an extension on the tax filing and tax payment due dates. The deadlines below apply to all 2019 tax balances owing.

What are the new deadlines?

Personal tax return

(including Quebec)

 

Normally due

Now due

Tax return:

April 30

June 1

Taxes owing:

April 30

September 30

Personal tax return with self-employment/business earnings

(including Quebec)

 

Normally due

Now due

Tax return:

June 15

June 15

Taxes owing:

April 30

September 30

 

What are the penalties and interest charges?

For personal tax returns, late-filing penalties and interest on unpaid taxes will not be applied if the tax returns are filed, and all outstanding income taxes are paid, by September 30, 2020.

Late-filing penalty: The official tax filing deadline is still June 1 but a late-filing penalty will not apply if your tax return is filed by September 30. The Canada Revenue Agency (CRA) will charge 5% of the 2019 balance of income tax owing in the first month and then will add 1% of your 2019 balance of income tax owing for each full month you are late thereafter, to a maximum of 12%.

Interest charges: If you have a balance of income tax owing for 2019 after September 30, the CRA will charge compound daily interest — starting on October 1, 2020 — on any amounts owing. This includes any balance owing if the CRA reassesses your tax return. As of the third quarter of 2020, the rate is 5% on overdue taxes and can change every three months.

What if you can’t pay in full by the deadline?

Even if you cannot pay your full balance owing on time, you can avoid the late-filing penalty by filing your tax return by September 30, 2020.

If you have access to funds on your line of credit, consider using it. The interest rate on your line of credit may be lower than the CRA’s current 5% interest rate on overdue taxes.

The next best thing is to contact the CRA if you can’t pay your taxes owing in full. Depending on your situation, you may qualify for a payment arrangement or tax relief.

Payment arrangement: This is an agreement you can make with the CRA to pay smaller amounts over time until you’ve repaid your entire debt, including interest.

Before allowing you to do this, the CRA may ask you to provide proof of income, expenses, assets and liabilities. Check out the payment arrangement calculator to see whether this might work for you.

Tax relief: If you’re experiencing extraordinary circumstances that prevent you from making your tax payment, your penalties or interest may be cancelled or waived in whole or in part. The circumstances under which the CRA would consider waiving penalties or interest could include a serious illness or accident, and serious emotional or mental distress, such as experiencing a death in your immediate family.

For more information, please see the CRA’s page on COVID-19 income tax filing and payment deadlines.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.