It is common practice for the Canada Revenue Agency to
notionally assess you if you do not file your tax returns. This means that they
come up with a balance of what they believe you owe if you had filed. However,
in almost every situation the amount the CRA believes you owe is a lot higher
than what you actually owe. This means that the penalties and interest
calculated by them is also a lot higher.
I most recently had someone come in to my office with a
letter from the government saying that he owed over $27,000,000 even though he
would not owe anywhere close to it.
If you file your tax returns after the fact, the CRA will
override their figures with your figures. But, it will take longer for the
assessments to arrive in the mail because your filed returns are now considered
reassessments and actually take longer to be processed by CRA. So if you are
waiting for a refund, you are going to be waiting even longer.
The real danger of
arbitrary assessments is that the government only allows a taxpayer ten years
to file their own personal tax return. After that, the arbitrary balance
stands.
For example, if you have not filed your 2002 tax return, it
must be filed by December 31st 2012 or else the CRA will no longer
accept it. Now let’s say you worked for only part of the year and would not
have owed anything. And the CRA arbitrary assesses you for $10,000. Once it is
January 1, 2013 that $10,000 balance will remain on your account until you pay
it off.
Our government can sometimes be lenient, but not forever. It
is your responsibility to make sure you are filed. And if you have let your
filings get out of hand, you need to get caught up as soon as possible so that
your figures are on file and not the potentially inflated ones created by the
Canada Revenue Agency.
