Filing Late Can Cost You More Than You Think

Many Canadians miss the tax deadline because they’re busy, confused by paperwork, or assume they don’t owe much. But when you file late, the CRA adds penalties and daily interest, which can grow quickly — especially if you owe a balance.

Here’s a simple guide to what you’ll owe and how to avoid unnecessary charges.

1. The Late-Filing Penalty

The CRA charges a penalty if you file after the deadline AND you owe taxes.

How it works:

• 5% of your balance owing

• + 1% for each full month your return is late

• Up to a maximum of 12 months

Example:

If you owe $2,000 and file 6 months late:

• 5% penalty = $100

• Monthly penalty = 1% × 6 months = 6% ($120)

• Total penalty = $220

You pay this on top of your tax balance.

2. Repeated Late Filing = Double Penalties

If the CRA has charged you a late-filing penalty within the last three years, the penalty becomes much higher:

• 10% of your balance

• + 2% per month (up to 20 months)

This can turn a small balance into a large bill.

3. Daily Interest Charges

Even without penalties, interest starts on May 1st for any unpaid taxes.

The CRA charges:

• Compound daily interest

• On the amount you owe

• And also on penalties added to your account

Interest rates change every quarter — and they’ve been increasing recently.

The longer you wait, the more expensive it gets.

4. Late Interest on GST/HST, Installments, or Benefits

Interest applies to more than just income tax.

You may owe interest if you:

• File GST/HST late

• Miss instalment payments

• Receive benefits you weren’t entitled to (and owe them back)

These charges also compound daily.

5. What If You Can’t Pay? File Anyway.

Most people don’t know this:
👉 The worst thing you can do is not file.

If you file late:

• You get penalties + interest

If you file on time but can’t pay:

• You get interest only

• No late-filing penalty

You can also:

• Ask for a CRA payment plan

• Apply for Taxpayer Relief if you had hardship, illness, or financial difficulty

6. When the CRA May Waive Penalties

You can request Taxpayer Relief if you missed deadlines due to:

• Serious illness

• Family tragedy

• CRA errors or delays

• Natural disasters

• Financial hardship

The CRA may reduce or remove:

• Penalties

• Interest

Relief isn’t guaranteed, but it’s worth trying if you have a valid reason.

7. How to Avoid Penalties and Late Interest

✔ File on time — even if you can’t pay

This prevents the largest penalty.

✔ Make partial payments

Any amount reduces future interest.

✔ Set reminders for tax deadlines

Especially if you’re self-employed or filing for benefits.

✔ Use a tax professional

Mistakes or missing slips can cause delays and extra charges.

Final Thoughts: Filing Late Gets Expensive Fast

Penalties and interest can snowball quickly, especially if you wait months — or years — to catch up.

The best move is simple:
👉 File on time, and pay what you can.

If you’re behind on your taxes, TikiTax can help you:

• File current and past-year returns

• Reduce penalties

• Set up payment plans

• Respond to CRA letters