Falling behind on your taxes can be stressful, especially when dealing with the Canada Revenue Agency (CRA). Whether it’s due to oversight, financial hardship, or lack of information, not filing your tax returns can lead to serious consequences. The good news? You can fix it. This article provides a step-by-step guide on what to do if you’re behind on your CRA tax returns and how professional help can make the process smoother.
Why Timely Tax Filing Matters
Filing your tax return on time isn’t just a legal requirement—it helps you avoid interest, penalties, and even legal action. It also ensures access to benefits and credits such as:
- Canada Child Benefit (CCB)
- GST/HST credits
- Old Age Security (OAS)
- Employment Insurance (EI)
Late filers may miss out on these essential government supports. Additionally, your tax return history plays a role in determining creditworthiness for financial institutions and mortgage lenders.
Step 1: Don’t Panic, But Act Quickly
If you’re behind, it’s important to remain calm but take action immediately. The longer you wait, the more penalties and interest you may accrue.
CRA Late Filing Penalty Structure:
- 5% of your balance owing for the current year
- 1% of your balance owing for each full month your return is late (up to 12 months)
If this is a repeated offence, penalties can double. These charges compound and can add up significantly over time, potentially turning a manageable debt into a financial burden.
Step 2: Gather Your Financial Documents
Start collecting all necessary documentation for the years you’ve missed:
- T4s and other income slips
- Receipts for deductions (RRSPs, child care, medical expenses)
- Past notices of assessment
- Investment and rental income statements
If you’re missing any of these, contact employers, financial institutions, or use CRA’s “My Account” portal to retrieve them. Keeping all your documents organized will also help identify any overlooked deductions.
Step 3: File All Outstanding Returns
You must file all previous years’ returns, even if you don’t owe any taxes. Filing even a year or two late can still open the door to refunds or benefits. You can:
- File electronically via CRA-certified tax software
- Use a paper return
- Hire a CPA to file for you
Don’t forget to double-check your information and calculations before submitting. Any errors can delay processing or raise red flags with CRA.
Step 4: Consider the Voluntary Disclosures Program (VDP)
The CRA’s Voluntary Disclosures Program allows you to correct past tax filings without facing prosecution and possibly reduce penalties. To qualify, your disclosure must be:
- Voluntary
- Complete
- Involving at least one year past due
- Involving a potential penalty
The VDP doesn’t guarantee full relief from interest or penalties, but it offers a way to come clean with a lighter financial impact. A tax professional can assess whether this program is a fit for your situation and assist with the submission.
Step 5: Set Up a Payment Plan
If you owe taxes and can’t pay in full, the CRA allows installment payments. Avoid ignoring tax debt—it can result in wage garnishment or frozen bank accounts.
CRA Payment Arrangement Options:
- Monthly installment plan
- Pre-authorized debit agreement
- Taxpayer relief request (in cases of hardship)
Having a payment plan in place keeps you in good standing and prevents additional collection actions. CRA is more likely to cooperate if you show willingness to resolve your debt.
Step 6: Get Professional Help
Handling multiple years of tax returns and CRA negotiations can be overwhelming. This is where hiring a professional accountant, like the experts at STS CPA in the Greater Toronto Area, is invaluable.
Benefits of Working with a CPA:
- Ensure accurate and compliant filings
- Maximize eligible credits and deductions
- Navigate CRA negotiations
- Identify opportunities to reduce penalties
- Receive tailored financial advice for future compliance
A knowledgeable CPA understands tax laws, recent updates, and filing procedures—saving you time, stress, and potentially money.
How STS CPA Can Help
STS CPA Professional Corporation specializes in tax solutions for both individuals and businesses across the GTA. We can help you:
- File overdue returns accurately and efficiently
- Apply for CRA relief programs like VDP
- Create a manageable payment plan that fits your budget
- Prevent future filing delays with year-round support and reminders
We understand that life happens. Our goal is to support you with confidentiality, professionalism, and a clear path to compliance.
Proactive Steps to Avoid Falling Behind Again
Once you’re caught up, it’s important to avoid slipping behind again. Some proactive steps include:
- Setting calendar reminders for tax deadlines
- Organizing financial documents throughout the year
- Using accounting software or cloud-based tools
- Booking quarterly check-ins with your CPA
- Contributing to RRSPs and keeping records for deductions
Tax season doesn’t have to be stressful when you stay organized and connected to trusted advisors.
Conclusion
Being behind on your CRA tax returns isn’t the end of the world—but ignoring the issue can make it worse. By acting quickly, gathering your documents, filing your returns, and seeking professional support, you can get back on track and regain your financial peace of mind.
If you’re in the Greater Toronto Area and need help, contact STS CPA today for a confidential consultation.