As a taxpayer and Canadian citizen, you may sometimes go through tough financial times and be unable to pay taxes owed come tax season. CRA form RC376 is one document you may have to fill out to achieve this. The Canada Revenue Agency (CRA) allows individuals to cancel or waive interest or penalties based on an inability to pay or financial hardship. Form RC376 is a statement of income, expenses, assets, and liabilities that states your financial situation or provides a written statement. A taxpayer can ask for relief in the form of extending the filing-due date, waiving interest or penalties, or authorizing a reassessment, to name a few.
Reasons to file form RC376
Financial hardship is the most obvious reason to file this form, but other life events may be considered by the CRA. They include, but are not limited to:
Death, accidents, serious illnesses, and emotional or mental distress
If a loved one dies, you or a loved one gets a serious disease such as cancer, or are involved in a vehicle accident, you may be unable to pay your taxes on time. This incurs fees and penalties. However, if you can demonstrate and prove that this event prevented you from paying on time, the CRA may waive the interest charges or penalty fees. You may need to provide documentation such as a:
- Death certificate or obituary
- Doctor's certificate or letter indicating the type of illness and length of treatment (onset of illness and the date or expected date of recovery)
- Hospital dates (if applicable)
- explanations regarding the effect the medical condition had on meeting your tax obligations
Natural or human-made disaster
Events such as floods, fires, earthquakes, and oil spills are just a few examples of events beyond your control. These events may disrupt your life, displace you from your home, and make it difficult if not impossible to file your taxes on time. You may need to provide documentation such as:
- Insurance statements
- Fire report
- Police report
Error by the CRA
In the unlikely event the CRA makes a mistake with your filing, an undue delay in resolving an audit or objection occurs, or incorrect information is provided by the CRA, you may be eligible to get your interest and penalties waived. You will have to explain in writing the details and timelines of the delay or error caused by the CRA.
When is the right time to file form RC376?
The deadline to file your taxes for the current year and pay taxes for the previous year is April 30th. If you or your spouse or common-law partner are self-employed the date to file is extended to June 15.
When you file your income report, you can apply for a CRA Taxpayer relief program.
As well as filling out form CR376, the CRA will ask you to provide documents to demonstrate your financial hardship. Documents to support your financial disclosure may include:
- Current mortgage statements
- Property assessments
- Rental agreements
- Monthly bills
- All bank and credit card statements for the most recent three months
- All current investment statements
Important things to know about CRA form 376
- You do not have to use Form RC376. The CRA will not deny a relief request because a taxpayer did not use this form.
- You have 10 years from the end of a calendar year in which the tax year or fiscal period at issue ended to make a request to the CRA for relief or to file an income tax return.
How Leonard Tam can help
We have been advising businesses and individuals in the Toronto area since 1990. With years of experience behind us, we can advise you on the right course of action if you are late filing your taxes and think you may be eligible to use form RC376 to waive penalties or fees. Get in touch with us for a free consultation to find out more.