In the event of a disaster, both natural or man-made, issues with your business’s taxes are likely the last thing on your mind; however, there will eventually come a time when you’ll need to figure out if an emergency impacts your ability to file and/or pay your taxes on time, and what happens if you cannot do either.
The CRA offers relief from penalty or interest in several types of situations that prevent you from meeting tax obligations, which include extraordinary circumstances such as natural or human-made disasters (e.g., flood or fire) or civil disturbances or disruptions in services (e.g., a postal strike). As every emergency situation and business is different, the CRA requires you to provide a full financial disclosure alongside Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest to ensure you are eligible for the relief. In many cases of extraordinary events, such as the widespread flooding in BC and Eastern Canada in November 2021, the CRA will issue a news release outlining special considerations that will be given to providing relief to people and businesses affected by the situation.
For more insights on how to prepare to respond and recover from impacts to your business’s operations and accounting in the event of an emergency, reach out to your DMCL advisor—they’ll be happy to work with you to ensure you have all the guidance you need.