The decision to strike by the Public Service Alliance of Canada – Union of Taxation Employees (PSAC-UTE) involving some 39,000 Canada Revenue Agency employees could not have come at a worse time for taxpayers, millions of whom are still scrambling to complete and file their 2022 tax returns by the filing deadline.
But lest you panic, here’s a quick guide on how to file on time despite the strike, and what to expect in terms of CRA’s processing time and reduced services.
No extended deadline
Despite the strike, the CRA has stated it currently has no plans to extend the general tax filing deadline, which falls on May 1, 2023. (The normal April 30 deadline falls on a Sunday, so we get an extra day this year.) For taxpayers who have self-employment income or who have a spouse or common-law partner with self-employment income, the general filing deadline is June 15, 2023, but any tax owing is still due by May 1, 2023.
“Canadians should take steps to ensure their return is filed by May 1, 2023, along with payment for any balance owing,” the agency said.
If you file your tax return late and have a balance owing, you will be charged a late-filing penalty. Filing late can also delay your future benefit and credit payments. The late-filing penalty is five per cent of your 2022 balance owing, plus an additional one per cent for each full month that you file after the due date, to a maximum of 12 months.
If, however, the CRA has charged you a late-filing penalty for 2019, 2020 or 2021 and has issued a formal demand for you to file a return, your late-filing penalty for 2022 doubles to 10 per cent of your balance owing, plus an additional two per cent for each full month that you file after the due date, to a maximum of 20 months.
That’s why even if you can’t pay your balance owing on time, you should still file on time to avoid being charged the late-filing penalty. The CRA also charges non-deductible arrears interest, compounded daily, at the prescribed rate, which is currently nine per cent for overdue taxes.
The CRA said it is continuing to accept all tax returns during the strike. Tax returns that are filed electronically, which is the majority of returns, will continue to be processed automatically by the system “without delay.” The good news is that if the CRA owes you a refund, the agency will pay you refund interest at a rate of seven per cent, compounded daily, from May 31 (if you file on time), or starting 30 days after filing, if you file late.
As of April 17, the CRA reported that around 17 million Canadians have already filed their 2022 tax returns. Of those, over 94 per cent were filed electronically, with the remaining six per cent filed on paper. By comparison, the CRA processed nearly 29.5 million personal tax returns for the 2021 tax year, meaning that based on last year’s numbers, more than 40 per cent of taxpayers still have to file this tax season.
On the bright side, if you haven’t started preparing your return, all your tax slips should be available online using the CRA’s Auto-fill my return feature, which remains unaffected during the strike. Introduced in 2016, Auto-fill allows individuals and authorized tax preparers to automatically fill in parts of their return with information the CRA has available at the time of the request, such as certain T-slips, registered retirement savings plan contributions and much more. To use the service, you must be registered for the CRA My Account program and be using NETFILE-certified software that offers the Auto-fill feature. This tax season, there are more than 25 different certified software packages and online web offerings to choose from.
You can also go onto the CRA’s My Account to download a PDF list of slips that the CRA has received for you. Keep in mind, however, that most, but not all T-slips are online. For example, inexplicably, the T4PS slip, Statement of Employees Profit Sharing Plan Allocations and Payments, is not available online, which comes as a surprise to many employees of large publicly traded companies that have profit-sharing share plans, who may forget that they need to manually enter this info each year.
What if you need to reach the CRA to check up on some personal information before filing? Good luck.
“Canadians should expect that some CRA services will be delayed or unavailable,” the CRA said in an April 19 press release. But the agency also assured Canadians that benefit payments will be “prioritized,” and that the monthly tax-free Canada child benefit payments will continue to be issued, as scheduled, for qualified families.
Jonathan Ruben, a Toronto-based accountant whose firm files hundreds of personal tax returns each tax season, said the CRA strike may hamper his ability to get pertinent tax information related to tax filings, such as a new client’s carry-forward information from prior years. “There are situations where we do reach out to the CRA and now there is nobody to call, and nobody to answer,” he said.
The CRA is prioritizing calls related to benefit payments the agency administers, which include income tax enquiries related to benefit entitlements. But expect increased wait times to reach a CRA service representative.
As an alternative, the CRA is encouraging Canadians to use the CRA’s online services, such as the CRA My Account, MyBusiness Account or Represent a Client, to manage your personal or business tax affairs or those of your clients.
On a personal note, the CRA strike is particularly discouraging as I have yet to hear anything back from the CRA after submitting copies of my 2021 work-from-home expenses and charitable donation receipts after being told to send them “within 30 days” of the CRA’s review letter. That was six months ago, in October 2022.