How will the federal strike affect taxpayers?
Marvin Wendall, a Vancouver-based accountant, is seeing a sense of urgency among his clients as a result of the early Wednesday morning start of a strike that may affect tax season. Just two weeks remain until the filing deadline for Canadian tax returns, and people are worried about when they'll receive their refunds.
“So the realization is that the strike is protracted who knows when they’re gonna get their money back and a lot of people depend on it. They depend on their refund,” he said.
Millions of taxpayers are racing to file their 2022 tax returns before the filing deadline following the Public Service Alliance of Canada - Union of Taxation Employees (PSAC-UTE) decision to strike, which involves about 39,000 workers of the Canada Revenue Agency.
Despite the strike, the CRA will not extend the usual tax filing deadline of May 1, 2023. The typical due date for self-employed taxpayers' returns is June 15, 2023; however, any unpaid taxes must still be paid by May 1, 2023.
“Canadians should take steps to ensure their return is filed by May 1, 2023, along with payment for any balance owing,” the agency said.
Regardless of the strike, the CRA stated it will still accept all tax returns. The system will continue to process electronically submitted tax returns, which make up the bulk of filings, automatically and "without delay."
The good news is that if the CRA owes an individual a refund, the agency will pay the interest on the amount owed at a rate of 7%, compounded daily, starting on May 31 (if filed on time) or beginning 30 days after filing, if filed late.
If an individual files their tax return after the due date and there is a balance owing, they will be fined a late-filing penalty equal to 5% of the balance due in 2022 with a 1% surcharge for each full month filed beyond the due date, up to a maximum of 12 months.
For 2022, late-filing penalty doubles to 10% of balance owing, with an additional 2% for each full month filed after the due date, up to a maximum of 20 months, if the CRA already charged the individual a late-filing penalty for 2019, 2020, or 2021 and has issued a formal demand to file a return.
In order to avoid paying the late-filing penalty, individuals should still file on time even if they are unable to pay their balance due on time. Additionally, for past-due taxes, the CRA assesses daily compounded non-deductible arrears interest at the specified rate of 9%.
According to the Canadian Revenue Agency (CRA), 17 million Canadians have already submitted their 2022 tax returns, with over 94% filing online and the remaining 6% filing on paper. However, more than 40% of taxpayers still have to file this tax season based on data from last year.
Wendall continues by saying that he thinks the CRA slowed down the tax return process "somewhat deliberately" in order to play some serious "gamesmanship" ahead of this strike.
“It’s just to put pressure on the government,” he said. “They’re going to use whatever leverage they have to force the government’s hand, and taxpayers are going to start to get angry and start vocalizing their problems so the government’s caught between CRA and the taxpayer.”
Individuals and approved tax preparers must be enrolled for the CRA My Account program, be using NETFILE-certified software, and have the Auto-fill function enabled in order to utilize the CRA's Auto-fill my return feature. There are more than 25 distinct approved software programs and online web solutions available this tax season.
