CRA Penalties and Interest Questions

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.

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.

• 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%.