Filing Your Return -> Late Filing, Penalties & Interest
Late Filing of a Tax Return / Late Filing Penalties and Interest
Interest and Penalties on Late-Filed Tax Returns
Income Tax Act s. 162(1)
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
Interest rates are subject to change quarterly. For current rates, see the Canada Revenue Agency (CRA) web page which provides prescribed interest rates. For July to September 2022 the interest rate on overdue taxes, Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums is 6%.
Penalty for Filing Your Return Late
The late filing penalty is 5% of the outstanding balance, plus 1% of the outstanding balance for every month that your return is late, to a maximum of 12 months (that would be a total penalty of 17% of the balance owing).
Interest is also charged on penalties. If you were charged late-filing penalties for any of the 3 preceding tax years, your late filing penalties are doubled. For more information, see CRA's web page Interest and the late-filing penalty.
Tax Tip: File your tax return on time even if you can't pay all the taxes owing, to avoid the late-filing penalty!
How to File a Late Return
For dates and hours of NetFile and EFile availability, see our article on Tax Filing Methods. Many 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.
Penalties 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!
Taxpayer relief (fairness) provisions
Self-Employed CPP Contributions Where No Tax Return Filed Within 4 Years
Filing an Adjustment / Amendment to Your Tax Return - very easy!
Canada Revenue Agency (CRA) Resources:
Late, amended, or revoked elections
Interest and the late-filing penalty
Revised: May 29, 2022
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