Life gets busy
Tax returns can pile up. If you owe tax and miss a filing deadline, CRA penalties and interest can add to your balance. Knowing the rules helps you take action.
What does the CRA charge for filing late?
For an individual income tax return filed after the deadline with a balance owing, the standard late-filing penalty is 5% of the unpaid tax plus 1% for each full month late, up to 12 months. A higher repeated late-filing penalty can apply if the CRA issued a formal demand to file and assessed a late-filing penalty for one of the three preceding tax years: 10% plus 2% per full month, up to 20 months. CRA charges daily compound interest on unpaid balances, including applicable penalties.
What if I owe tax for multiple years?
Each tax year is assessed separately, so filing several overdue returns may result in separate balances, penalties and interest. A return that results in a refund or no tax owing generally does not attract the standard late-filing penalty, although filing can still be important for benefits and compliance.
Can I reduce what I owe?
CRA taxpayer relief may cancel or waive penalties and interest in qualifying circumstances, such as serious illness, disaster or certain financial hardship. The Voluntary Disclosures Program may offer relief on qualifying disclosures of previously unreported information; eligibility and the relief available depend on the circumstances. Interest relief may be available under applicable rules, but the underlying tax generally remains payable.
What should I do if I am behind?
Gather slips, receipts and prior-year information, identify all missing returns and file as soon as practical. If you cannot pay the full balance, ask CRA about a payment arrangement. An accountant or appropriately authorized representative can help prepare filings, review potential relief requests and communicate with CRA with your authorization.
The bottom line
Overdue returns are often easier to resolve with a clear plan. Filing promptly can limit additional late-filing penalties and interest. For support, explore our personal tax return services or contact Ghazanfar Professional Services.