Bounce back from late filings with a quick recovery plan
Running a mental health practice requires a lot of attention to your clients, which can cause tax deadlines to slip your mind. But missing Canada Revenue Agency (CRA) deadlines can result in significant financial and administrative consequences. Here’s how to quickly recover if you’re behind schedule, and how to prevent it from happening again.
Why Acting Fast Matters
The quicker you act after missing a deadline, the less severe the financial impact. The CRA charges a 5% penalty on your balance owing, plus an additional 1% per month. If you’ve previously missed deadlines within the past three years, the penalty doubles to 10%, with an additional 2% monthly.
Interest on unpaid personal tax balances compounds daily, starting May 1. Missed filings can also suspend important payments, including GST/HST credits, Canada Child Benefit (CCB), and Old Age Security (OAS), impacting your cash flow.
Missed-Deadline Action Checklist
Take these steps immediately upon realizing you’re late:
- Gather all relevant slips, receipts, and documentation right away.
- File your return immediately, even if you can’t pay in full. Filing stops additional late penalties, and the interest charges are lower than penalties.
- Make a partial payment, if possible, then set up a payment arrangement through your CRA “My Account” or by phone.
Calculating & Reducing Your Liability
Use the CRA’s online calculator or a tax estimator tool like TurboTax to determine exactly what you owe. Understanding these amounts clearly will help you manage repayments effectively.
Note for self-employed therapists: Your personal income taxes are payable by April 30, although self-employed individuals have until June 16, 2025, to file their returns. Plan payments accordingly to minimize penalties and interest.
Relief Programs for Difficult Situations
If your delay was due to circumstances beyond your control, such as illness or severe financial hardship, you may qualify for:
- Taxpayer Relief (Form RC4288): Apply to waive or cancel penalties and interest.
- Voluntary Disclosures Program (VDP): Proactively disclose any past omissions before CRA initiates contact, potentially reducing penalties.
Special Considerations for Mental Health Practice Accounting
Mental health practitioners must be aware of additional filing requirements:
- Late GST/HST, payroll, or T4 filings incur high penalties (10%-20% plus interest), which can seriously impact your cash flow.
- Stay informed about sector-specific obligations, like the Underused Housing Tax (UHT), to avoid substantial penalties.
- If you are incorporated, and assuming your practice is a Canadian-controlled private corporation (CCPC), your corporate tax return is due six months after your corporation’s year-end, while the balance owing is typically due three months after year-end.
Preventing the Next Miss
Set up reliable systems to prevent future missed deadlines:
- Enable CRA email notifications and regularly monitor your My Business Account.
- Automate reminders through bookkeeping software like Xero or QuickBooks and include key deadlines in your practice-management calendar.
- Schedule quarterly check-ins with your accountant. Key dates include June 16 for self-employed tax returns, September 30 for GST/HST third-quarter filing, and February 28 for T4 submissions.
Key 2025 Deadlines at a Glance
- April 30: Personal balance-due date
- June 16: Self-employed tax return filing deadline for 2024
- June 30: Corporate SR&ED filing deadline (December year-end)
- Ongoing: Instalment and payroll remittance dates (monthly or quarterly as assigned)
Final Thoughts: Getting Back on Track
Act quickly by filing immediately, paying what you can, and utilizing available relief programs. Most importantly, use tools such as email notifications, automated bookkeeping, and regular check-ins with your accountant to avoid future missed CRA deadlines.
Book a 15-minute Tax Therapy session with us to address urgent tax questions and reduce future stress.
