Transcript

Host: Welcome to the segment called Avoiding penalties and other consequences, part of the CRA’s GST/HST Information for a New Small Business video.

With me is Sarah Taylor.

Welcome Sarah.

Subject matter expert: Thank you Kathleen.

Host: What happens if I file my GST/HST return late?

Subject matter expert: A failure to file penalty plus interest will apply to any return you file late, unless there is no amount owing or the CRA owes you a refund on that return. The CRA will calculate a penalty as follows:

a) 1% of the amount owing; plus

b) the result of the following calculation:

25% of the amount you calculated in a) multiplied by the number of months the return is overdue (to a maximum of 12 months).

Host: What happens if I receive a demand to file?

Subject matter expert: If you receive a demand to file a return and do not do so by the date requested, a penalty of $250 will be charged.

Host: What happens if amounts are paid late?

Subject matter expert: The CRA will charge interest on any overdue GST/HST amount that you have to remit.

Host: What if I didn’t file electronically and I was supposed to?

Subject matter expert: If you are required to file electronically and you don’t, the penalty is $100 for the initial return not filed electronically and $250 for each subsequent return not filed electronically.

Host: Will interest apply if I don’t make instalment payments?

Subject matter expert: If the instalment payments you make are equal to one quarter of your net tax from your last fiscal year and you make those payments in full and on time, the CRA will not charge instalment interest, even if your net tax for the year is more than the instalments you made.

Interest on the part of any instalment payment that was not paid or that was paid late will be charged at the end of the fiscal year.

Instalment interest is calculated beginning the day after the instalment was due and ending on the earlier of the following dates: the day the overdue instalment amount and any accrued interest is paid; and the day your net tax owing for the year is due.

Host: What interest rate does the CRA charge for overdue amounts?

Subject matter expert: Interest equal to the basic rate plus 4% will be charged on all overdue amounts.

The basic rate is based on the rate charged on 90-day Treasury bills, adjusted quarterly, and rounded up to the nearest whole percentage.

For more information on interest rates, go to www.cra.gc.ca/interestrates. The link is included in the Related links for this segment.

Host: Where can I get more information on penalties and other consequences?

Subject matter expert: More information is available in the publication, RC4022, General Information for GST/HST Registrants. The link is included in the Related links for this segment.

Host: Thank you Sarah.

This concludes the segmentcalled Avoiding penalties and other consequences, part of the CRA’s GST/HST Information for A New Small Business video.

Thank you for watching.