March 31, 2022
📰 Read the FULL ARTICLE here.
Read an excerpt below.
Cindy Marques, a certified financial planner and the co-founder and CEO of MakeCents — a financial planning company in Toronto — works with a number of young small-business owners. And many of them feel doing their taxes has suddenly become much more complicated — with higher stakes.
“A lot of them feel a lot of pressure, especially if they're coming from a position of having previously worked for an employer where everything was deducted at source,” says Marques.
That pressure leads to a lot of procrastination, she adds. Having to sort out what they owe can be daunting. It can be intimidating if you’re worried about putting in the wrong numbers or triggering an audit.
“There's a lot of fear around that, even when launching into the business to begin with,” says Marques. “It kind of carries with them all year round, and really explodes around this time of the year.”
But Marques says the only thing worse than having to deal with owing the CRA money is avoiding it.
“The consequences of filing late are worse than just having tax outstanding,” says Marques. The CRA automatically charges a 5% fee on your balance owing, plus an additional 1% for every month you’re late — up to 12 months.
And if you’ve filed late the past several years, that initial penalty is bumped up to 10% and the monthly fee is an additional 2% for up to 20 months after the deadline.
“At least if you file, you have all your cards on the table, you know what you owe, it's one less unknown,” says Marques.
And once the official paperwork is done, many people feel a huge sense of relief.
“There's no situation that isn't solvable,” says Plamondon. “It's important for people to understand they may think that they have the worst situation in the world, and that as soon as CRA finds out, they're gonna go to jail, but that's not the case.”
It may sound silly to some, but Marques says worries over jail time are actually pretty common with tax anxiety.
“There's this constant fear that even with the guidance of tax software, even though they've been setting aside money all year round … of doing things wrong,” says Marques. “And they're really worried about what the consequences are should the CRA ever put a magnifying glass over their situation.”
She adds when she helps her clients prepare their taxes, she makes a point of doing it with them rather than for them. Having an understanding of how everything adds up puts many taxpayers at ease — and sets them up for success for future filing, too.
Another way of taking back some control when experiencing financial anxiety is to track your expenses. Marques points out the FP Canada report on financial stresses showed that while only 19% of respondents felt that would help ease their stress, nearly double that amount did find it helpful once they picked up the habit.