Author Topic: CRA Amount Owing Question  (Read 1985 times)

Prairie Moustache

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CRA Amount Owing Question
« on: February 13, 2024, 08:46:41 PM »
Hello,

Are there any CPA's lurking here? This year I was self employed for 2/3's of the year and then became a T4 employee. I'll end up owing the CRA about $20k which I have set aside in a HISA. My question is: will the CRA let me pay this off in quarterly pre authorized debits or is it basically the whole shabang or 10% interest? I'm trying to decide if I should try to delay the payments, even if they charge a 1% fee, and use some of the lump sum as a prepayment against our mortgage (so long as I'm not going to be in the CRA's bad books, and I won't be charged 10% interest). I know if I kept being self employed I would need to make installment payments this year, so not sure how they'll handle this since I have since become a good ol T4 wage slave.

Thanks in advance if you know the answer!

RetiredAt63

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Lews Therin

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Re: CRA Amount Owing Question
« Reply #2 on: February 14, 2024, 11:03:53 AM »
Hello,

Are there any CPA's lurking here? This year I was self employed for 2/3's of the year and then became a T4 employee. I'll end up owing the CRA about $20k which I have set aside in a HISA. My question is: will the CRA let me pay this off in quarterly pre authorized debits or is it basically the whole shabang or 10% interest? I'm trying to decide if I should try to delay the payments, even if they charge a 1% fee, and use some of the lump sum as a prepayment against our mortgage (so long as I'm not going to be in the CRA's bad books, and I won't be charged 10% interest). I know if I kept being self employed I would need to make installment payments this year, so not sure how they'll handle this since I have since become a good ol T4 wage slave.

Thanks in advance if you know the answer!

It's a 1% monthly fee. That's a terrible interest rate. It would be best to pay it off right away, then lump sum after when you can. The fee from CRA will be higher than the mortgage rate interest.

techwiz

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Re: CRA Amount Owing Question
« Reply #3 on: February 16, 2024, 09:40:57 AM »
Not a CPA, but my advice is to pay off the whole shabang to avoid interest, penalties and being in the CRA's bad books.

Prairie Moustache

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Re: CRA Amount Owing Question
« Reply #4 on: February 16, 2024, 12:12:38 PM »
Someone told me once that they may change the terms of the PAD agreement depending on how the tax agent you get feels on that particular day... but I'll just assume the 10% interest, pay it off and carry on. Thanks!

CathMsMustache

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Re: CRA Amount Owing Question
« Reply #5 on: February 19, 2024, 07:08:51 PM »
My first post!  I'm no CPA but I'm an Ontario sole proprietor ~20 years and I do my own returns. 
1. have a look at https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html
if one owes more than $3K in a year, one is required to make quarterly payments, both for income tax and GST.  The income tax payment instalment dates in 2023 were, Q1 March 15th, Q2 June 15th, Q3 Oct 15, Q4 Dec 15; for GST Q1 was April 30 (May 1, Apr 30 was a Sunday) Q2 July 31, Q3 Oct. 31, and Q4 January 31 of 2024.  if the payments were considered overdue CRA could, though I'm not sure, possibly begin charging interest the day after each due date.
2. https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates.html
the interest rates pages, which are updated quarterly.  the 2024 Q1 interest rate is 10%.
I learned today not to consult youtube on how to fill in a GST return using the quick method.  So please don't believe me -- read the CRA pages, anything you can find. 
But if it were me I would pay them immediately.
(I have received earned interest on overpayments.  Not sure what the rate was.)