Okay, first thing’s first - just take a deep breath and chill out. Everyone makes mistakes!
The CRA is sympathetic toward your human follies. As long as you let them know you’ve done wrong, they’re sure to let you go with your limbs – and wallet - intact.
But don’t get us wrong - punishment will be in due order. While they’ll surely appreciate your honesty, you’ll still be held accountable for what you owe.
In any case, here’s what you should do to keep the tax man from smiting you down:
Don’t sweat the small stuff
The CRA doesn’t issue refunds or collect money on balances that amount to less than a toonie. Simply put, they’re not interested in your couch change. It’s not worth their time and effort to correct errors that hold such little value.
So if the error is insignificant in value, just forget about it and move on. If not, prepare yourself and…
Play the waiting game
Didn’t see that coming, did you?
As much as you and the CRA would like to get the whole thing over with, you have to wait for them to send you a notice of assessment.
File an Adjustment form
So let’s say you’ve filed your tax return, only to soon discover a couple of donation slips that COULD’VE gotten you a juicy refund.
Don’t worry – if you’ve missed out on a deduction, or have other changes you’d like to make on your return, you’re in luck. All you have to do is fill in the T1-ADJ (Adjustment Request) form. It’s a one-page document where you simply:
- Make note of the lines on the tax return that you’d like to change
- Provide an explanation for your screw-up
- Send it in to the tax centre, as indicated on the instructions provided on the back
Alternatively, you could also visit the CRA website and select, “Change My Return” option found on the “My Account” section.
Either way, the result will be the same. Just remember to provide all supporting documentations, which may include receipts, schedules, or other relevant documents!
File a Voluntary Disclosure Form
If you’ve made any grievous errors in your past returns, you should probably consider filing a Voluntary Disclosure form.
As the name implies, this program allows taxpayers to voluntarily confess their tax sins to the CRA. If the requirements of the program are met, the CRA could waive off penalties associated on the income you’ve adjusted or included.
However, you’ll still have to pay the tax owing, with interest. But that shouldn’t stop you from filing a voluntary disclosure! Even if the error was made years back, it’s best you disclose the income before the CRA notices it’s missing. Because once they have you on their sight, you’re going to be in a world of hurt.
Get this: tax penalties can be up to 50% of the tax evaded, plus the interest, starting from the day the tax was due!
And as if beating your wallet wasn’t enough, it’s also possible for the CRA to file criminal charges that could slap you with additional penalties, plus a prison sentence of up to 5 years.
Keep in mind that the voluntary disclosure form is only applicable to errors that would incur a penalty. After all, the point of the program is to FORGIVE penalties while collecting outstanding taxes and interest.
Just be honest with the CRA
The CRA treats honest taxpayers with the respect they deserve. But if you ever do try to pull the rug on them, you’re not going to have a very good time. Honestly, if you thought Canadian winters were bad, wait until you get on their bad side.
Or on second thought, don’t. Don’t go anywhere near there. Just do yourself a favour and let them know as soon as you find an error on your tax return! If your numbers don’t add up, it’s only a matter of time until they find out.
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