Canadian Tax and
Financial Information
Can't Pay the Tax

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Filing Your Return

What If I Can't Afford to Pay the Tax I Owe?

Even if you can't afford to pay the income tax that you owe, you should file your tax return by the annual deadline in order to avoid any late-filing penalties.

The late filing penalty is 5% of the balance owing, plus 1% of the balance owing for each full month that your return is late, to a maximum of 12 months (that would be a total penalty of 17% of the balance owing).  If you have incurred late-filing penalties in any of the three preceding taxation years, your late filing penalties are doubled.  For more information, see the Canada Revenue Agency (CRA) web page Interest and the late-filing penalty.

After you file your tax return, you will be sent an assessment notice from Canada Revenue Agency (CRA) which shows the balance of tax owing.  After the payment deadline, interest will accrue on this balance at the CRA prescribed rate of interest, compounded daily.  The current interest rates can be found on the CRA prescribed interest rates page.

See the CRA page Payment Arrangements, which talks about what you can do if you cannot pay the balance owing.

Tax Tip:    Always file your tax return on time, even if you can't afford to pay the tax!


Revised: April 20, 2016

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