Behavioural economists advise that spending money, such as paying taxes, has psychological cost – the pain of paying. What they do not tell us is that not paying our taxes creates even greater pain in the form of penalties and interest. The year is now (June 10) almost half over, and most individuals would have filed their income tax returns and, hopefully, paid any amounts due. The Canada Revenue Agency (“CRA”) ensures that it will make it even more painful for taxpayers who do not pay on time. The rules are strict in respect of timing, penalties, and interest (at near criminal rates) that only the government could get away with. There is no equitable relief in taxation.
In simple terms, depending upon the source of one’s income, there are two ways of paying income taxes: (1) through withholding at source or (2) in installments. Regardless of the method, taxpayers must pay forthwith the full amount of their assessed taxes, together with any interest and penalties thereon.
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