If you do not file and pay what you owe by April 30 each year, the Canada Revenue Agency (CRA) will charge you interest on that amount starting on May 1. The interest is compounded daily, not monthly or yearly. The rate of interest charged by the CRA (called the prescribed interest rate) can change every three months.
Tip: Even if you cannot pay all of the taxes you owe by April 30, you should still file your return on time to avoid any late-filing penalties. Learn more about late-filing penalties
Where can I get help to pay my tax bill?
You can borrow money from the bank, or from friends and family. Or, you may be able to borrow against your house, if you own it. The longer you owe money, the more it costs. Learn more about managing debt
If you can show the CRA that you have reasonably tried to get the money and you still cannot pay your balance in full, you may request a payment arrangement. But you will still be charged daily compound interest on any unpaid balance (starting May 1) until you pay it in full.
Does the CRA offer relief if there are events beyond my control?
In some cases, the CRA can offer you taxpayer relief. This means they may waive or cancel penalties and/or interest on unpaid taxes under certain circumstances. For instance:
- If you lose your job or suffer some other financial hardship.
- If there are circumstances beyond your control. Examples include disasters like fires and floods; civil disruptions like a postal strike; serious illness or accident, or serious emotional or mental distress, such as a death in the immediate family
- If the CRA made any errors. These include processing errors, errors in CRA publications or incorrect information provided to taxpayers, and unreasonable processing delays.
To request taxpayer relief, complete form RC 4288. Be sure to give the facts and reasons why the charges should be cancelled or waived and send in all relevant supporting documents and information.
What happens if I refuse to pay my tax bill?
If you don't take steps to resolve your unpaid taxes, the CRA can take legal action against you. They can "garnishee" your income or your bank account. That means that some or all of your paycheque could go straight to the CRA. They can also seize and sell your assets to settle your tax bill. Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.