Introduction: Deadlines for Tax Returns, Tax Payments, Tax Objections, and Tax Appeals
This article discusses some of the most important tax deadlines that Canadian taxpayers should keep in mind. In particular, we shall focus on the deadlines for tax returns, tax payments, objections, and appeals.
Deadlines for Tax Returns
The appropriate tax-return deadline depends on whether the taxpayer is an individual, a deceased individual, a corporation, or a trust or estate.
- Individuals: An individual—i.e., a natural person—must file a Canadian T1 General Income-Tax return for a particular tax year by April 30th of the following year. If the individual or the individual’s spouse earned business income during the year, the individual may file by June 15th of the following year, but interest on any tax owing will accrue starting on April 30th. (An individual may be exempt from filing a tax return in certain cases—notably, where the individual doesn’t owe income tax for that year.)
- Deceased individuals: If the taxpayer dies, the taxpayer’s legal representative must file the deceased taxpayer’s income-tax return. If the taxpayer died on October 31st or prior, the deceased’s tax return for that year is due by the following April 30th (or June 15th if the deceased or the deceased’s widow earned business income). If the taxpayer died on November 1st or later, the deceased’s tax return for that year is due by the later of (1) April 30th of the following year (or June 15th as above) and (2) six months from the date of death.
- Corporations: A corporation (excluding a registered-charity corporation) must file a Canadian T2 Corporation Income-Tax Return within six months from the end of its taxation year. A corporation may have an off-calendar tax year coinciding with its fiscal period.
- Trusts and Estates: A trust or estate must file a Canadian T3 Trust Income-Tax Return within 90 days from the end if its taxation year. Generally, a trust’s taxation year is the calendar year. But a trust earning business income may, under section 249.1, elect to use an off-calendar tax year coinciding with the business’s fiscal period. In addition, a deceased taxpayer’s estate may use an off-calendar tax year during the three-year period following the taxpayer’s death. Afterwards, the estate, if it still exists, must adopt the calendar year as its tax year. Finally, on the date that the trust or estate distributes all its property to the beneficiaries, the trust or estate will cease to exist, and its taxation year will end.
Deadline to Pay Tax Owing: Balance-Due Date & Instalment Payments
A taxpayer must pay the tax owing for that year by the taxpayer’s balance-due date for that year. After that date, interest will begin to accrue on any tax owing but not yet paid.
- Individuals: For an individual who died on or after October 1st in a particular year and on or before April 30th of the following year, the balance-due date is six months after the date of death. In any other case, the balance-due date for a particular tax year is April 30th of the immediately following year. Further, an individual must make instalment payments for income-tax owing if (i) the individual’s income-tax owing for the year is greater than $3,000 ($1,800 for Quebec residents), and (ii) that amount isn’t subject to withholding at source.
- Corporation: Generally, a corporation’s balance-due date is two months after the end of its taxation year. A corporation that qualifies for the small business deduction will generally receive an extra month—i.e., its balance-due date is three months after the end of its taxation year. In addition, a non-Canadian-controlled private corporation must generally make monthly instalment payments for the year’s estimated income-tax owing.
- Trusts and Estates: A trust’s balance-due date is 90 days from the end of its taxation year.
Deadline for Notice of Objection Disputing a Notice of Assessment or Reassessment
A Canadian taxpayer may dispute a tax assessment or reassessment by filing a notice of objection. The individuals and testamentary trusts receive extra time to file a notice of objection for an immediately preceding taxation year.
Individuals and Testamentary Trusts: If the taxpayer is an individual or a testamentary trust, the taxpayer must file the notice of objection by the later of:
- 90 days of the date on the assessment or reassessment; and
- one year after the balance-due date for the assessed or reassessed year. A trust’s balance-due date is 90 days from the end of its taxation year. For an individual who died on or after October 1st in a particular year and on or before April 30th of the following year, the balance-due date is six months after the date of death. In any other case, the balance-due date for a particular tax year is April 30th of the immediately following year.
For example, on June 1, 2018, the CRA assessed your 2017 tax year. You wish to dispute the assessment. The date that is 90 days after the assessment date is August 30, 2018. The balance-due date for the 2017 tax year is April 30, 2018, and one year after that date is April 30, 2019. So, April 30, 2019 is your deadline to file a notice of objection for your 2017 assessment.
All Other Taxpayers: In any other case, the deadline to file a notice of objection is within 90 days of the date on the assessment or reassessment.
Deadlines for a Tax Court Appeal
A taxpayer must first file a notice of objection to pursue an appeal to the Tax Court of Canada. In other words, a taxpayer cannot commence a Tax Court appeal to dispute the initial assessment.
Generally, a taxpayer would pursue litigation should the Canada Revenue Agency reject the taxpayer’s objection and confirm its original assessment or reassessment.
- Tax Court of Canada: A taxpayer may appeal to the Tax Court of Canada by filing a notice of appeal within 90 days from the date that the CRA confirmed the assessment or reassessed. In addition, a taxpayer may appeal to the Tax Court of Canada if 90 days have elapsed since the taxpayer served the notice of objection and the CRA has yet to notify the taxpayer that it has vacated the assessment, confirmed the assessment, or reassessed.
- Federal Court of Appeal: A taxpayer may appeal the Tax Court’s judgement to the Federal Court of Appeal by filing a notice of appeal within 30 days of the Tax Court’s judgment.
- Supreme Court of Canada: A taxpayer may appeal the Federal Court of Appeal’s judgment to the Supreme Court of Canada only if the taxpayer gets leave—i.e., permission—from the Supreme Court. The Supreme Court will grant leave only if it is satisfied that the taxpayer’s issue involves a matter of public importance. The taxpayer must apply for leave to appeal to the Supreme Court of Canada within 60 days of the Federal Court of Appeal’s judgment. The taxpayer must submit supporting written arguments with the application. If the Supreme Court of Canada grants the application, the taxpayer must file and serve a notice of appeal within 30 days of the Supreme Court’s decision to grant leave.
Tax Tips — Deadline Extensions & Relief for Late Penalties
A Canadian taxpayer may receive an extension for some of the deadlines discussed above. For instance, the CRA may at its discretion grant an additional 12 months to object to an assessment or appeal to the Tax Court of Canada by filing an extension-of-time application and satisfying various conditions.
So, if you’ve missed one of the deadlines discussed above, you might not be out of luck. Discuss your options with one of our expert Canadian tax lawyers today.
You might incur a steep monetary penalty should you miss a tax deadline. For example, the penalty for a late-filed tax return is 5% of that year’s unpaid tax plus 1% for every full month that the return is late (up to 12 months). So, a tax return that’s over a year late will result in an additional 17% penalty to your tax bill (and this doesn’t include the interest that may apply as well).
The Canada Revenue Agency offers remedial programs—like the Voluntary Disclosures Program and Taxpayer Relief (a.k.a. a Fairness Application)—that may allow you to either reduce the penalties that you already owe or avoid incurring penalties in the first place.
A Canadian taxpayer must satisfy several—often demanding—conditions to qualify for these remedial programs. And you typically may only apply once—that is, you only get one shot to make your case. As a result, your application must be carefully drafted and prepared. Our top Canadian tax lawyers can assess your situation, provide insight on relief that may be available, and prepare your application accordingly.