Chapter 14 summary notes Summary of chapter 14 of the textbook. Useful to look over quickly before an exam.

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University of Waterloo
Accounting & Financial Management
AFM 461
Stanley Laiken

Chapter 14 PenaltiesFailure to file a return o 5 of the tax not interest unpaid at the date on which the return was to be filed o Extra 1 of unpaid tax is levied for each complete month that the return was late up to 12 months o If you are a repeated late filer within the past 3 years the percentages raise to 10 and 2Failure to report an amount of incomeo 10 of income failed to report if there had been a previous failure to report in the past 3 yearsFalse statements or omission o Knowingly or due to gross negligence made errors will impose penalty of the greater of 1 100 or 2 50 of the difference in tax liabilityLate or deficient instalments sec1631 o 50 of the interest charged on late or unpaid instalments in excess of the greater of 1 1000 or 2 25 of the interest calculated as if no instalments have been paidmeaning if your instalment charges are less than 1000 then there will be no penalty BUT THERE IS STILL INTERESTCivil penalties for misrepresentation of a third party o Planners penalty where the third party professional participates in the making of a false statement for the person in the course of planning activityThe lower limit of 1000 and higher limit of the fee charged for planning o Preparers penalty imposed on a third party person who makesparticipates in the making of a false statement on behalf of another personCan be lower limit of 1000 and upper limit of 100000fee chargedLimited to 50 on the tax on unreported income Questions to determine civil penaltiesDid the tax payer know or REASONABLE should have knownDid he intend to under reportDid he show indifference to incompliance with the actDid he show wilful reckless disregard of the law Waived or cancelled interested and penaltiesCRA can cancel fines if o The taxpayer makes a voluntary disclosureThe taxes owing and the interest are still owed though o Circumstances beyond the taxpayers control occur
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