Tax agency won't extend filing deadline despite accountants' pleas
Tax preparers say challenges posed by COVID-19 are making it difficult to file returns on time
The federal government has no plans to extend the tax filing deadline this year despite pleas from accountants and tax preparers who say the COVID-19 pandemic has made it challenging to make the cutoff date.
Income tax returns are due on April 30 in what is widely seen as one of the most complex tax seasons in recent memory.
It's a deadline some accounting firms fear they won't be able to meet on behalf of their clients.
"The situation is not better than last year," said Geoffrey Webber, a tax specialist at a chartered accounting firm in the western Quebec town of Cowansville.
"We could really do with a one month break just to relieve the stress."
Working from home in a paper-based industry
Many clients and tax preparers are working from home under various public health restrictions. Webber said many clients have only recently submitted the necessary documents — some of whom assumed there was an extension similar to last year.
And while many tax services are now available online, Webber said the profession remains heavily paper-based. Some of his clients don't have easy access to a scanner to digitize their tax forms and receipts, Webber said, while others are hesitant to meet in person to sign tax forms.
"I don't usually lose sleep during tax season. It's really busy, but it's what I signed up for," said Webber. "[Now] I wake up at night worrying about this stuff."
Taxpayers who owe money to the Canada Revenue Agency (CRA) and don't file their returns by the filing deadline are subject to a financial penalty and interest. The penalty amounts to five per cent of the balance owing, plus an additional one per cent for each full month the return is late, up to a maximum of 12 months.
Those who file late could be cut off from income-tested benefits like the Canada Child Benefit, or have to repay some of the money from those benefits if there's a large change from the previous tax year's return.
Last year, the federal government extended the tax filing deadline to May 31 and subsequently suspended late payment penalties until September.
But this year, the government is sticking to its schedule.
Extending deadline could threaten benefits, CRA says
In a statement, a spokesperson for the Canada Revenue Agency said the government won't be extending this year's filing deadline.
"Extending filing deadlines this year would risk interrupting essential credit and benefit payments for millions of Canadians, payments on which thousands of Canadians rely," Pamela Tourigny said in a statement.
Tourigny said CRA understands that, due to COVID-19, some may find it difficult to meet their financial obligations, including paying tax debts. She said the agency will work to assist Canadians on a case-by-case basis through existing taxpayer relief provisions.
CRA previously announced that people who earned less than $75,000 in 2020 and who received COVID-19 benefits such as the Canada emergency response benefit or employment insurance don't have to pay interest until next April
The government's decision not to extend the filing deadline comes even as Quebec and other jurisdictions have done so.
Quebec's finance minister announced Thursday that Revenue Quebec would suspend penalties and interest on tax returns filed after the province's original April 30 deadline for the entire month of May. The minister said the grace period would give Quebecers affected by the COVID-19 crisis more time to meet their fiscal responsibilities.
In the U.S., the Treasury Department and Internal Revenue Service extended the deadline for the filing of federal income taxes from April 15 to May 17.
Countless accounting firms, particularly smaller ones, are having trouble getting their work done by the deadline, according to Bruce Ball, vice-president of tax at Chartered Professional Accountants of Canada, the national body for the accounting profession.
Ball said the organization has been pushing CRA for some form of relief to take pressure off accounting firms — either a filing extension or a suspension of penalties for late returns. He said he is "disappointed" by the government's refusal to budge.
"Our main goal was to give preparers and taxpayers more time," said Ball. "For a lot of these firms. It's just not possible to do the work required under these conditions."
Conservative MP Philip Lawrence, the party's national revenue critic, pressed the government during question period in the House of Commons Friday to extend the filing deadline to June 30. Lawrence said many Canadians are struggling to regain access to their CRA online accounts after the agency locked hundreds of thousands of accounts earlier this year as a precautionary cybersecurity measure.
"Filing taxes is a stressful time for everyone, but in a global pandemic it can be downright harrowing," said Lawrence. "Conservatives believe that the tax filing deadline should be extended to provide relief to those who are struggling."
Liberal MP Franceso Sorbara, who is parliamentary secretary to the national revenue minister, replied by citing the interest relief measures for Canadians who received COVID-19 benefits and existing provisions for taxpayers who incur penalties for reasons beyond their control.
"These measures will ensure that Canadians who need help this tax season will get it," Sorbara said.