Penalties for not reporting income: Facts you must know
When it comes to reporting your income while filing your income tax returns you might be a bit casual. You may miss reporting some of your incomes. However, this may have serious implications. We at The Accounting and Tax are providers of personal tax consultancy service in Toronto through this blog will try to make you aware of the penalties for not reporting incomes.
Penalty for repeated failure to report income
You might fail to report all your income on this year’s return and in case you had also had not reported on 1 in any of your 3 previous years, you might be liable to pay a federal, provincial or territorial penalty. The penalty would be to the tune of 10% on the amount you have failed to report. Along with this, you would also have to pay 50% of the difference amount between the understated tax (and overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report. However in case you voluntarily disclose about an amount you failed to report, the tax authorities may waive the penalties. This waiver is a part of the Voluntary Disclosures Program.
False statement or omissions penalty
You might also be penalized in case you knowingly or otherwise have made a false statement regarding your income in the previous year’s return. The penalty is equal to $100 and 50% of the understated tax. It also might be on the overstated related to false statement or omission. Here also if you voluntarily disclose about the same as per the Voluntary Disclosure Program, the penalty may be waived.
The CRA is the authority which has the discretion to cancel or waive penalties or interest when the taxpayer may not be in a position to meet the tax obligations. This may be owing to circumstances beyond their control.
In conclusion, we can say that you must be careful while filing your income tax returns. You must ensure to include all your incomes. Failure to do the same might have serious implications as mentioned above.
In case you require any consultation regarding your personal or corporate taxes in Canada or USA please get in touch with us at “The Accounting and Tax”.
