Top 3 Steps On How To Pay Your Taxes on Time
Paying taxes is the bane of everyone’s life, but it must be done if you live and work in Canada. Filing your personal income taxes doesn’t have to be a headache of a chore if you understand the different methods that the Canada Revenue Agency (CRA) provides to taxpayers to pay on time.
In Canada, you must file your tax return if you earn more than 2CAD before May the 1st of each tax year. By doing this, you will not have to pay any late fees, incur any interest or have the dreaded CRA collections officers paying you a visit.
If this is your first time paying taxes and you are worried that you won’t do it correctly, then take a look at our three easy steps to paying your taxes below. Remember to provide accurate information, do not round your numbers, and when asked for your account number, have your Social Insurance Number handy.
Determining the Correct Amount to Pay:
There are 3 ways in which you will be able to determine if you are in debt with the CRA or are due a refund.
Your tax return slip will detail any balance owed on line 485. Anything higher than 2CAD means you owe the government money. Whereas line 484 will display the sum, you are entitled to as a refund. Once the information has been inputted correctly, make sure you take note of these lines and take action when necessary.
Alternatively, you can call the CRA if you do not have access to your return slip. By calling, you will be able to speak to an agent who will walk you through any balanced owed and advise you on how to pay.
You can also register online for a CRA account. From here, you will be able to see your tax history displayed and anything owing to the government. You can also register a business account from this portal and keep all of your tax information in one place.
Also Read: 5 Consequences of Unfiled Tax Returns if Not Filed on Time
Choosing a Payment Method:
There are five ways in which you can pay for any taxes owed.
You can attach a check to the first page of your paper tax return. Make sure you put your Social Insurance Number on the front of your check so that it can be traced if lost. Make out your check to the Receiver General.
Another way you can pay is by using online or telephone banking. You should be able to choose the CRA, or Receiver General as a payee and make a transfer like you would any other bill. Remember to add your Social Insurance Number and the type of account you are paying for, plus the tax period which you want credited. Your bank will be able to support you in doing this if you need support.
The CRA has developed a payment service to make paying as easy as possible if you bank with Bank of Montreal, Scotiabank, RBC Royal Bank, or TD Canada Trust. By using their Interac online option, you can transact any total up to your withdrawal limit straight to the CRA.
Alternatively, you can pay at the bank with a check or money order attached to a personalized remittance voucher. The vouchers can be ordered online; they can’t be duplicated because of the special ink, so a photocopy won’t be accepted.
Lastly, you may mail your check or money order addressed to the Receiver General with your personalized remittance voucher attached. You can send your funds without the voucher, but in order for it to be accepted, you must include a written, signed, and dated note that details your Social Insurance Number, account type, and what tax period the funds cover.
For further details visit the Canada Revenue Agency website. Here, you will find telephone numbers and addresses needed to find out how much you owe and to make your payments
What Happens If I Don’t Pay?
It is crucial that you pay your taxes before May 1. If you do not pay the total amount, you will incur a daily interest amount to your account. If the sum is not settled by either payment in full or through a payment installment plan, then the CRA is in their right to seek funds elsewhere.
In accordance with TaxLawCanada.com CRA collections officers are entitled to “garnishee amounts owing to a taxpayer who has an outstanding balance on their tax account, including salary payments”.
A payment plan is your best option if you cannot afford to pay the full amount in one payment. You will still be charged a fee for paying in installments but they will not be as high as what can accumulate by hiding from your debts.