Tough tax penalties for Canadian accounting compliance failures
April 12, 2012
The "repeated failure to report income" penalty catches many Canadians by surprise each tax season, requiring them to pay 20 percent of the entire unreported amount of income in the most recent year, CBC reports.
Failure to report income is a serious violation of accounting compliance
rules - so much so that not reporting two tax slips in a four-year period (once in the most recent tax year and an additional time in any of the previous three) is enough to trigger the penalty. Consequently, many of those affected by it never intended to avoid taxes, but rather fell victim to snafus such as tax slips being sent to an old address or slips being lost, forgotten or late to arrive.
The number of penalties has risen in recent years, from 67,580 in 2008 to 81,389 last year. The incidents in 2011 resulted in $39.3 million worth of penalties.
Tax code complexity is also an issue across the border, according to a recently released study by the U.S. National Small Business Association. The majority (56 percent) of small business-owners who responded to the survey said administrative burdens were the most significant challenge posed to their business management
efforts by the federal tax code.