Important Reminder about Government Payments
It is important to file and pay Source Deductions, Retail Sales Tax, GST, EHT and WSIB returns on time. This is trust money except for WSIB and EHT, collected on behalf of government agencies, and it must be remitted on time to avoid non-compliance charges (late filing penalties). The agency must receive the return and payment by the due date or if the due date falls on a weekend, you need to file by the Friday before the weekend.
It is particularly important to file and pay source deductions on time. Penalties are harsh: 10% to 20% of the amount collected if the failure to remit was made knowingly or through gross negligence. For repeat offenders, the penalty rate can go as high as 20% with prescribed interest rate (currently 5%) daily compound interest. Any amount owing, although you already filed the return, remitted past the due date is also subject to these penalties. To appeal charges, a letter to the Chief of Appeals in the tax services office can be written or a form T400A Objection-Income Tax Act form can be filed. These appeals must be filed within 90 days, and are not likely to be successful unless there are extreme circumstances.
Retail Sales Tax
The fine for failing to file a return by the due date is $50 or more for each day the return is late, even if there is no RST/PST to report. Only one late payment in four years is excused from late penalties. The penalty for not filing Retail Sales Tax on time is 10% of line 2 (RST Collected) and 5%, adjusted quarterly of line 3 (Tax payable for Own Use). If the underpayment of the RST is due to neglect, carelessness, wilful default or fraud, an additional penalty of 25% (minimum $100) of the unpaid amount may be assessed, even if the total RST was correctly shown on the return. By July 2010, it will be abolished to merge with GST.
The government requires that GST returns be filed on time, even if a refund is expected. Late nil returns will result in late notices and slower refund payments in the future. The late filing penalty is 5%, adjusted quarterly plus compound interest. Civil penalties are charged for failure to file a return (or provide information) or making false statements or omissions. There are fairness provisions in place so you can appeal these decisions.
If WSIB is not reported or late, the premium is calculated by WSIB according to their records and an additional premium of 5% is added. Even if you paid no wages and have no premiums owing, you must complete and return the remittance form to avoid incurring a penalty. Interest is charged at the Bank of Canada rate plus 6%, adjusted quarterly. Besides this, your late payment may mean you are unable to receive clearance certificates, premium rate decreases, and membership in Safety Groups, such as the Safe Communities Incentive Program. WSIB also started to impose a $50.00 fine for being late in reconciling your account even though you do not owe.
Employers have to pay this tax if their payrolls are more than $400,000.00. They need to register and file for the liability; calculation is based on 1.95% per each hundred. EHT will not inform you of the need to register; it is done in a voluntary basis. Most will file and pay in an annual basis; a payroll of $600,000.00 and over will have to pay instalment in a monthly basis.