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Ontario|Tax LawRules for Individuals 177 What if you do not file a return or you pay late? Normally, if you do not file a tax return and are required to, or if you make false statements in completing your tax return, or if you leave out important information so that you under report your income, the Income Tax Act imposes penalties. In circumstances of willful fraud or tax evasion you may be criminally prosecuted.
- Penalties for filing taxes late or paying too little
Under the law you are required to file your tax return and pay all taxes owing by April 30 of the following year. If you do not file a return, and are required to pay taxes, you will be assessed a penalty of 5% of the amount owing plus 1% for each month it is past due, up to 12 months. You will also be charged compound daily interest on any outstanding tax. If you cannot afford to pay the entire amount you owe at once, you may be able to arrange a payment plan with Canada Revenue Agency.
- Penalties for fraud and evasion
If you are suspected of fraud or tax evasion, you may be prosecuted for a criminal offence. If you are found guilty, the penalties can include a fine of between 100% to 200% of the amount of tax evaded, or up to 5 years in prison.
If you are found to owe more than you calculated, you can usually appeal this decision. If you are charged with a criminal offence under tax law, you should consult a lawyer immediately.
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