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CRA Late Filing Penalty

Learn about the CRA late filing penalty, how much you will have to pay if you file late, and how to avoid these charges. Farber Tax Solutions can review your situation and explain all your options clearly.

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What is the CRA Late Filing Penalty?


It’s important that you file your income taxes on time every year. If you do not file your taxes on time, and you owe tax debt for the year, you will be charged a CRA late filing penalty. The penalty is 5% of the balance owing for the tax year in question, plus 1% of the balance owing for each full month that your return is late, up to 12 months. As you can imagine, this adds up quickly. If you owe money and you wait a long time to file, you could find yourself paying a large amount in penalties.

The CRA late filing penalty can be even more costly if you also filed late – and were charged a penalty – in any of the previous three years. If this is the case, you could be charged 10% of the most recent tax year balance owing, plus 2% for each full month your return is late, to a maximum of 20 months. The penalties for filing taxes late repeatedly are higher in an attempt to encourage people to file on time.

In addition to the late filing penalty, the CRA will also charge compound daily interest on the amount you own, starting on May 1st (the day after most individuals are required to file and pay their taxes). The rate of interest that is charged can change every three months. Current interest rates are shown on the CRA website.


How to Avoid a CRA Late Filing Penalty


The most straightforward way to avoid a CRA late filing penalty is to file your taxes on time. Some people mistakenly believe that, if they don’t have the money to pay their taxes, they’re better off not filing. This isn’t true. Even if you can’t pay your tax debt on time, you should still try to file on time so you don’t have to pay a penalty.

Generally, the tax filing deadline for most individuals is April 30th of each year. If this date falls on a weekend, the deadline is the next business day. If you have self-employment income, you are not required to file your return until June 15th, but you still need to pay your tax balance by April 30th.

If you do not owe tax debt, you will not be charged a CRA late filing penalty. However, you should still file your income taxes on time. If you don’t file on time, this can affect your benefits. For example, you may not get benefits such as the Canada Child Benefit on time if you are late to file.


Getting the CRA Late Filing Penalty Waived


You may be able to have penalties and interest charged waived. However, to be successful with this process, you’ll need to explain to the CRA why your return was late and the reason must be something that was out of your control. Potential reasons that may be accepted include medical emergencies, CRA errors or delays, natural disasters, and other situations.

If you are considering filing a request for taxpayer relief to cancel or waive penalties, please contact us today. Our team can review your situation and prepare your application, giving you the best possible chance of success.

Farber Tax Solutions Helps You at Every Step of the Way including:

  • 1| Organizing: We analyze all documents and communication, to fight the CRA on your behalf
  • 2| Audits: We assist you with audits and ensure proper conduct by tax authorities
  • 3| Appeals: We can prepare a Notice of Objection, clarifying your standing with the CRA
  • 4| Litigation: We represent you at all levels of court