Think it doesn’t matter if you report that $30 of income? Think again. Repeated failure to report income penalty is a hefty one.
If you fail to report an amount on your return for 2010 and you also failed to report an amount on your return for 2007, 2008 or 2009, you may have to pay a federal and provincial repeated failure to report income penalty. This penalty consist of a federal and provincial portion both of which are 10% of the amount that you failed to report on your current year return.
Joanne has been a resident of British Columbia all her life. At the time she filed her 2007 return she forgot to report $50 of interest income she received that year. In 2008, Canada Revenue Agency (CRA) reassessed her return to include the unreported income. When Joanne filed her 2009 tax return, she failed to report $2,500 of employment income she earned. Later that year when CRA reassessed her 2009 return to include the unreported employment income, Joanne was charged a $500 penalty ($250 federal + $250 provincial) for repeated failure to report income. The penalty was charged because Joanne failed to include on her 2009 return income that was required to be reported and one of her tax returns for the three previous years was reassessed for the same reason.
If you realize you have failed to report an amount, and CRA has not yet reassessed, you can voluntarily report the missing income through the Voluntary Disclosure Program. As a result CRA may waive these hefty penalties.
For more information or help in filing under the Voluntary Disclosure Program contact your local KHGroup office.