July 06, 2018
Find out how much you owe the CRA and what you can do to repay your tax debt.
Calculating CRA Tax Penalties
If a tax return is filed late, or if taxes are not paid when they are due, the Canada Revenue Agency (CRA) will charge interest and penalties on the balance owing. These charges can add up very quickly, so many people find themselves looking for a tax penalty calculator to understand how much they will be charged.
If you owe taxes, there are several things to remember:
- The CRA charges compound interest daily on outstanding tax bills
- The interest rate charged on unpaid tax debt changes every three months and is posted on the CRA website
- You will be charged a late-filing penalty if you do not file your tax return on time
Even if you cannot pay the amount owing by the due date, you should still file your tax return by the deadline, so that you will not have to pay a penalty for a late return.
If you have filed taxes late or if you owe tax debt, interest, or penalties, Contact Farber Tax Solutions to determine the best course of action to resolve your tax problem. We offer a free consultation with our tax professionals.
How Much Does the CRA Charge for Late-Filing and Outstanding Tax Debt
If you owe money and do not file your tax return on time, the CRA charges a late-filing penalty of 5% of the balance owing plus 1% of the balance for each full month that the return is late, to a maximum of 12 months.
However, if you have been charged a late-filing penalty in recent years, the penalty increases. If you were charged a penalty in the last three years, the CRA will charge you 10% of your balance owing as a late-filing penalty and charge 2% each full month to a maximum of 20 months.
Resolving Tax Problems
Rather than spend time and effort with a CRA interest and penalties calculator, it is a better idea to spend this time working to resolve your tax situation. After all, since the CRA continues to charge interest and penalties the longer a tax debt remains outstanding, it is critical to resolve the situation as quickly as possible.
The team at Farber Tax Solutions is comprised up of ex-CRA, legal, and accounting professionals who have years of experience in successfully communicating and negotiating with the CRA. We will review your situation and provide you with guidance and advice every step of the way, giving you the most favourable outcome possible for your tax problem. Contact us today to book a free consultation.