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Late Filing of a Tax Return / Late Filing Penalties and Interest

Interest and Penalties on Late-Filed Tax Returns

Interest on Overdue Balances

Penalty for Filing Your Return Late

How to File a Late Return

Interest and Penalties on Late or Insufficient Instalment Payments

Penalty For Late-Filed Elections

TaxTips.ca Resources

CRA Resources

Interest and Penalties on Late-Filed Tax Returns

If your return is late and there is a balance owing, you will be subject to interest and late-filing penalties. Interest is charged on the outstanding balance starting the day after the due date of the taxes payable, and is compounded daily.

Interest on Overdue Balances

Income Tax Act s. 161(1)

After you file your tax return, you will receive an assessment notice from CRA which shows the balance of tax owing. After the payment deadline of April 30th, interest will accrue on this balance at the CRA prescribed rate of interest, compounded daily. The current interest rates can change quarterly, and can be found on the CRA prescribed interest rates page.

The current rate will be increased from 9% to 10% starting January 1, 2024, and will be 10% at least until March 31, 2024.

Penalty for Filing Your Return Late

Income Tax Act s. 162(1), (2)

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. You'll be charged 10% of the balance owing, plus 2% of the balance owing for each full month that your return is late, to a maximum of 20 months. For more information, see the CRA web page Interest and the late-filing penalty (link at bottom).

Tax Tips:

Always file your tax return on time, even if you can't afford to pay the tax.

Pay your tax as soon as you can!

How to File a Late Return

For dates and hours of NetFile and EFile availability, see our article on Tax Filing Methods. Most late returns can be filed this way, using your income tax software.

Late returns can always be filed by sending a printed or manually prepared return to CRA. Forms are available from the CRA General Income Tax and Benefit Package web page.

Telefile is no longer available for filing tax returns.

For information on time limits for late returns and circumstances under which the interest and penalties may be waived, see the article on taxpayer relief (fairness) provisions.

Interest and Penalties on Late or Insufficient Instalment Payments

Interest at the prescribed rate, which is the same as the prescribed rate (see above - 10% starting January 1, 2024) for overdue balances, will be charged, compounded daily, on late or insufficient instalment payments. A penalty may be charged if instalment interest for the year is more than $1,000.

Tax instalments are due by the 15th of March, June, September and December, except for those whose main source of income is from farming or fishing. In that case, one instalment payment is due on December 31st.

Although CRA may send you an instalment notice, if you know that the instalments are not going to be needed because you'll have lower income in the year, it is not necessary to make the payments. However, if you miscalculate and find you should have paid instalments, you will be charged interest.

See Canada Revenue Agency's article Required tax instalments for individuals - Interest and penalty charges.

Tax Tip: Always pay your tax instalments on time!

Penalty For Late-Filed Elections

Income Tax Act s. 220(3.5)

Sometimes an election is required to be filed with an income tax return. When a request is made to late-file an election, a penalty can be imposed @ $100 per month x the number of months that the election is late, to a maximum of $8,000. This also applies to the designation of a principal residence in order to claim the Principal Residence Exemption when your home has been sold. The sale of your home must be reported on your personal income tax return - this is a new CRA administrative policy effective for the 2016 and later taxation years. If you are late in reporting, you will be subject to penalties!

TaxTips.ca Resources

Self-Employed CPP Contributions Where No Tax Return Filed Within 4 Years

Filing an Adjustment / Amendment to Your Tax Return - very easy!

Making Payments to Canada Revenue Agency

Taxpayer Relief Provisions (Fairness provisions)

Can CRA Withhold My Tax Refund and Benefits or Garnish My Wages?

Canada Revenue Agency (CRA) Resources:

Late, amended, or revoked elections

Interest and the late-filing penalty

Required tax instalments for individuals - Interest and penalty charges

Prescribed interest rates

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

Unable to pay for individuals - contact CRA right away!

Personal income tax debt collection - includes a payment arrangement calculator

Revised: September 20, 2024