People rarely enjoy paying their income taxes. However, most people don’t want to pay the government interest either. Should you be setting up a better system for paying your personal income tax?
Do you owe for 2016? If so, how do you get caught up? I often say “there is never a good year to pay two years taxes”, and I imagine that you would agree. The trick is to balance paying instalments for 2017 with paying any arrears for 2016. If you don’t owe for 2016 then you do not have this worry.
Canada Revenue Agency (CRA) is offering a new “service” where you can elect to make payments automatically, like a pre- authorized debit. How kind of them! But it is not a bad idea, and it could help you.
Many taxpayers, particularly of the self-employed variety, have little idea of how much of the money in their bank accounts might be theirs and how much belongs to the government.
Business owners will have money in their bank accounts that they owe for sales taxes, source deductions for employees and for business income taxes. If an owner does not pay attention to their payables they might spend money that does not in fact belong to them.
Sending money to CRA more frequently will remove some of that money from temptation and reduce the interest that is paid to CRA. When CRA has your money on time they don’t charge you interest.