How do I pay my tax bill?
Millions of Canadians will receive a tax refund but millions of taxpayers also owe money. So, what is the best way to pay your tax bill on time?
There are thousands of Canadian taxpayers facing a tax bill at this time of year. An RRSP withdrawal may mean you owe more tax, or perhaps you are a new mother who didn’t realize that maternity leave benefits are taxable.
Even if you owe money, you do not have to wait until April 30 to file your tax return. Many people who owe leave it until the last minute because they do not want to pay the government a minute before the deadline. I can understand the thinking, but you can actually file your return at any time. Regardless of when you file, the deadline to pay the outstanding amount is midnight on April 30; after that, you face interest charges.
Here are your options:
- Your financial institution: You can go to your bank and make a payment with a teller on April 30. Make sure you get a receipt with the date and time stamped on it, in case there are any issues later. You will also need the remittance form the CRA sent you with your tax package.
- Online banking: Many banks offer the Receiver General as a bill payment option. If you are paying online, you need to make sure your payment is received by April 30.
- CRA Online: Even if you are not signed up for telephone or Internet banking, you can still make the payment electronically using the CRA’s “My Payment” option.
- Mail: If you are mailing your return and cheque, it must be postmarked by midnight on April 30. The same applies if you are only mailing a cheque. You cannot simply put it in your local mailbox on April 30 at midnight. You need to make sure Canada Post received it on April 30 and stamped it accordingly.
- CRA Office: You can go to a CRA office to make a payment. The CRA no longer accepts cash, so make sure you have a cheque or money order if you choose this option.
If you do owe, ensure your payment is received by April 30. Otherwise you will be charged interest. The prescribed annual interest rate for overdue taxes for the second quarter of 2012 is 5 per cent. And even if you cannot pay the entire balance, file the return by April 30 to avoid the late filing penalty.
Senior tax pro and national spokesperson