CRA Penalties and Interest Questions

Facing penalties and interest on a CRA tax debt? Farber Tax Solutions have the answers to your questions. With ex-CRAs, tax lawyers and tax accountants on staff, we can help you handle the CRA.

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What are CRA’s penalties?

There are a variety of penalties the CRA can impose on a taxpayer’s account. Some of the more common ones include:

  • Late filing penalty – this is a penalty for filing late tax returns. The penalty is 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
  • Repeated failure to report income penalty – this is a penalty for repeatedly failing to report income in the past four years. The federal and provincial/territorial penalties are each 10% of the amount that you failed to report on your return.
  • False statements or omissions penalty – this is a discretionary penalty that may be levied against you if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your tax return. The penalty is the greater of $100 or 50% of the understated tax and/or the overstated credits related to the false statement or omission.

What are gross negligence penalties?

Also known as the “false statements or omissions penalty”, this is a discretionary penalty that may be levied against you if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your tax return. The penalty is the greater of $100 or 50% of the understated tax and/or the overstated credits related to the false statement or omission.

What is CRA’s interest rate?
  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums will be 5%.
  • The interest rate to be paid on corporate taxpayer overpayments will be 1%.
  • The interest rate to be paid on non-corporate taxpayer overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans will be 1%.
  • The interest rate for corporate taxpayers’ pertinent loans or indebtedness will be 4.52%.

Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:

  • 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
  • 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
  • 3| Offer a complete solution to your tax problems, including ex-CRA professionals and tax lawyers from Farber Tax Law.