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(John Tomaselli/photos.com)
(John Tomaselli/photos.com)

Understanding Tax

The penalties for late tax returns Add to ...

If you owe tax and you file your tax return after the deadline, you'll pay a late filing penalty – plus interest on the tax owing and on the penalty.

The first time you file late

You'll pay:

  • a late-filing penalty – 5% of the amount of tax you owe, plus 1% for every month that your return is late, for up to 12 months. That adds up to a maximum of 17% of the tax you owe.
  • interest – at the prescribed interest rate on the amount you owe, beginning on May 1. You'll also be charged interest on any late-filing penalties. Interest is compounded daily, not monthly or annually. The prescribed interest rate can change every 3 months.

If you miss the deadline again

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The late-filing penalties are doubled. For example, if the CRA charged you late-filing penalties for any of the 3 previous years, you would pay a penalty of up to 50% made up of:

  • 10% of the taxes you owe, plus
  • 2% of the taxes you owe for each full month that your return is late, to a maximum of 20 months.

If you owe tax from previous years

The CRA will keep charging you interest compounded daily on those amounts. Any tax payments you make will be applied first to the tax owing from previous years.


 

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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