Why does tax cycle say you don’t have to file till June if self employed? Why do you have to pay April 30th. Makes no sense.
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Because that’s what the Income Tax Act requires?
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Hi,
Filing due date information can be found here for T1’s:
~ Rob
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Because that’s just what it is. Welcome to Canada.
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You can file by June 15 without any late penalties. If you owe to CRA, you will be charged only interest on the amount due after April 30th, without a late filing penalty.
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Because once upon a time, if you had a small business, you could pick your year end date. Then the government decided that everyone had to have a Dec year end. All tax preparers complained and they relented to allow filing by Jun 15 to give us extra time to summarize and complete and of course they still want their money by Apr 30
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@mallardduck101
I have had to explain that to many clients over the years. I have this snippet saved in a text file, which I use when replying to them in email:
The income tax act requires everyone to pay ahead of time, throughout the year. Employees have taxes withheld from their paycheques. Businesses are expected to estimate their annual income and make instalment payments. As such, your taxes should be mostly “paid up” by December 31 of each year. You have until April 30 of the next year to remit any shortfall. Filing your tax return proves whether your estimates were correct. If you want to avoid interest charged by CRA, it is best to estimate high (make higher instalments throughout the year) and CRA will return any over-payment (i.e. you will get a tax refund).
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this is good.
i get asked this several times a day.
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While true, it also means they are providing an interest-free loan to the Government of Canada for which they will receive absolutely zero credit in any way, shape or form.
Pay what is required per instalment statements, prepare to pay additional amounts for April 30. If need be, invest the “reserved” payment during the year. A large refund is really NOT a good thing unless it’s unavoidable.
And yes, some people think of it as “savings” and “free money” upon filing.
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