Resident of Canada - 2006 Fiscal year Tax Return question. I din't file my 2005 Tax Return? Penalties?

Question

I was travelling through Asia during 2005 and failed to file my Tax Return with Revenue Canada. I had no income for 2005. In 2006 I came home and started working, so now I am looking to file my 2006 Tax return. Will I be Penalized for not filling my 2005 Taxes even though I had no income? If so, what penalties should I expect? Do I need to do a Voluntary Disclosure? I am very concerned about this, please respond.

Answer 1

You should definitely be filing your 2005 income tax return, even if you had no income whatsoever to report for a number of reasons.

Firstly, if you are single, you would be entitled to receive the Goods and Services Tax Credit if your income is within the range for eligibility for this credit. Since the return is late filed, you would receive the GST payment in one lump sum, rather than quarterly, since the previous 3 quarters, namely July 2006, October 2006, and January 2007 have already been sent out by CRA. The next GST payment is scheduled to be sent out in early April 2007.

Secondly, by filing your 2005 income tax return, you may also be eligible for any provincial tax credits, in Ontario there is a basic sales tax credit of $100.00 for individuals. If your net income in 2005 was below $4,000.00, then you would get this entire amount. If your income is above this $4,000.00 threshold, your Ontario sales tax claim would be reduced by 2% of your income which exceeds $4,000.00.

Most importantly, by filing, you would be maintaining compliancy with CRA, and keeping yourself in their database, and saving yourself a lot of headaches in future years.

As a former GST collections officer, I can assure you that there are no penalties imposed on late filing where the taxpayer does not owe any monies.

Also, there is no interest whatsoever paid to you on the GST tax credit to which you may very well be entitled.

If you need to obtain forms from prior years, you can go to CRA's website listed below and obtain the forms you require.

If you don't want to download these forms, you can contact CRA's forms department at 1-800-959-2221 and they will send you whatever forms you require.

Hope this helps you.

Answer 2

The assessment of your 2006 return will not be affected in any way by you not filing your 2005 return. It is a separate process. If there are things like loss carrybacks it will be included on your 2006 Assessment Notice.

If you have no income in 2005 you do not have to file a return unless you are requested by CRA to do so.CRA has a "matching"program that matches employment, pension, investment and other income with individuals that choose not to file. In situations where there appears to be a debit CRA will first request a return and then do an arbitrary assessment if no return comes in. As you have no income then you will not be on this system.If you had business or self-employed income in 2004 or earlier CRA might still do an arb for you under the assumption that you are still in business but they will request that you file first.

However it is a good idea to file a return for 2005 to get it on record in case you have problems in the future. For example if you need to make a fairness claim you have to have all returns filed up to date.

Late filing Penalties and resultant interest are charged only if there are outstanding taxes due on April 30 in the year you are filing for.

Answer 3

Although you do not have to file a tax return for a year with no income,you may want to file the 2005 return for consistency and completion of your file.

Answer 4

You don't need to file if you had no income. Since you had no income at all, the only exceptions to that would be: if you or your spouse are trying to apply for Child Tax Credits, or GST credits, if you have to repay an amount to your RRSP under the Home Buyer's Plan or LLP or, if CRA sends you a demand to file.

http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/filing-obligations/menu-e.html

When considering if you had any income, you'd have to consider your worldwide income, and not just the income from within Canada.

Answer 5

you CANNOT file 2006 taxes until your 2005 return is processed. if you fill out and send in 2006 taxes, they sit in a special room and get dusty until any outstanding yrs are sent in and processed. the $300 or so they owe you for GST will be larger than your penalty.

Answer 6

File your 2005 taxes. Since you didn't have any income, and didn't pay any taxes, there is no outstanding balance to charge interest on.

Hope this helps.

Answer 7

Don't worry about it, you weren't in Canada at the time

Answer 8

go this site and call and ask.
http://www.cra-arc.gc.ca/menu-e.html
1 800 O canada