The tax deadline for sole proprietors is this weekend — are you prepared?

For self-employed business owners filing their income tax, there are two big considerations to make:

1. The consequences of missing the sole proprietor tax deadline.
2. What to do if you owe and can’t pay.

1. Filing on Time

If you will owe, it’s essential that you file your income tax on time. If you haven’t done so yet, there is still opportunity.

The tax deadline for sole proprietors is June 15, 2019. However, since June 15, 2019 falls on a Saturday, the CRA will consider your return to be filed on time if the CRA receives it or it is postmarked by midnight on June 17, 2019.

If you don’t file on time, you may be subject to late-filing penalties:

• If you owe tax for 2018 and you file your return for 2018 after the due date, the CRA will charge you a late-filing penalty of 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
• If the CRA charged a late-filing penalty on your return for 2015, 2016, or 2017 your late-filing penalty for 2018 may be 10% of your 2018 balance owing, plus 2% of your 2018 balance owing for each full month your return is late, to a maximum of 20 months.

The CRA also charges daily compound interest on unpaid balances. Although sole proprietors have more time to file their return, if you will owe the CRA still expects their payments by the personal income tax deadline of April 30, 2019. If you owe a balance and haven’t paid it yet, you will likely be charged interest from May 1, 2019.

2. What to do if you owe and can’t pay.

What if you owe and can’t afford to pay? There are options available.

The CRA offers some voluntary disclosure and assistance programs, but these deal primarily with interest and late-filing penalties. The first step to take is assess the amount that you owe. If all penalties and interest were removed, could you afford to pay for the principal tax debt?

If the answer is no, then you need to look at dealing with the main tax debt.

The CRA is not an ordinary creditor and their collection tactics can be swift and harsh. While they may offer to negotiate a payment plan with you, based on our past experience, this negotiation is rarely successful for the taxpayer.

The key here is to be proactive and look at other methods of dealing with the tax debt.

You might consider:

• A debt consolidation loan – getting money from another lender and using that loan to repay the CRA.
• Filing for a Consumer Proposal.
• Filing for Bankruptcy.

To explore these tax debt solutions and more, download our free eBook, How to Make a Settlement with CRA: https://www.fullersolutions.ca/make-a-settlement-with-the-cra/.

At Fuller Financial Solutions, we can help you choose the best option for your circumstances. The CRA tax deadline for sole proprietors may be just around the corner, but our services are always here. Contact us today for a free consultation. Call 416-927-7200 or visit www.fullersolutions.ca.