If you’re a sole proprietor in Ontario, your personal income tax return is due by June 15. But here’s the catch: your tax payment is still due by April 30—even if your return isn’t filed until June. This gap between the payment and filing deadline can cause confusion—and costly penalties—if you’re not prepared.
The Risk of Waiting
Let’s say your accountant plans to file in June. If you haven’t paid anything by April 30, and it turns out you owe taxes, you’ll be on the hook for:
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Late-payment interest, compounded daily starting May 1
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A 5% penalty on the balance due, plus 1% per month for up to 12 months if the CRA doesn’t receive your return by June 15 (or later)
Even if your CPA files by the June deadline, you’re still charged interest on any unpaid tax from May 1 onward.
How to Avoid Tax Penalties
To stay ahead of the CRA, consider the following:
1. Estimate Your Tax Owing in Advance
Don’t wait for your accountant to file the final return. A qualified CPA or bookkeeper can help estimate your income and deductions early—especially if your books are up to date.
2. Make a Payment by April 30
Even if it’s not exact, make a partial or estimated payment by April 30 which can significantly reduce or eliminate penalties and interest.
3. Keep Financials Organized Year-Round
When your income and expenses are tracked consistently, it’s easier to run a quick calculation by March or early April.
4. Ask About Tax Installments
If you owed more than $3,000 in taxes last year, the CRA might require you to pay in installments this year. Staying on top of this prevents unexpected bills in April.
You Can Avoid Tax Penalties
Just because your return isn’t due until June 15 doesn’t mean you can ignore April 30. Be proactive, talk to your accountant early, and make an estimated payment if needed. It’s a simple step that can save you hundreds—if not thousands—in penalties and interest. Need help navigating taxes as a sole proprietor? Reach out to us. We’re here to help.
