If you owe tax and do not file your return on time, the Canada Revenue Agency (CRA) will charge you a late filing penalty and interest.
Late-filing penalty
The penalty is 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
You should file your tax return to avoid penalty even if you are not able to pay the taxes.
Repeated late-filing penalty
If you were charged a late-filing penalty on your return for previous three years, your late-filing penalty may go up to 10% of your balance owing, plus 2% of your balance owing for each full month your return is late, to a maximum of 20 months.
Interest
If you owe tax and file late, on top of late-filing penalty, you have to pay interest. The CRA charges compound daily interest starting May 1 on any unpaid amounts owing. This includes any balance owing if your return is reassessed. In addition, interest will be charged on the late-filing penalties starting the day after your return is due.
Request for taxpayer relief
You may request to waive or cancel the penalty or interest if you file your return late because of circumstances beyond your control.
Tax tip
File your tax return on time to avoid the late-filing penalty even if you cannot pay the full amount of your balance owing.