False reporting or repeated failure to report income

You may have to pay penalties if you make false statements or omissions on your tax return, or if you repeatedly fail to report your income. 

Repeated failure to report income penalty

You may have to pay a federal and provincial or territorial penalty if you failed to report an amount of $500 or more in both:

  • 2020 tax return
  • 2017, 2018, or 2019 tax return

The penalty is whichever one is less:

  • 10% of the amount you failed to report (federal and provincial or territorial)
  • 50% of the difference between:
    • the understated tax or overstated credits of the amount you failed to report
      and
    • the tax withheld from the amount you failed to report

The CRA may grant you penalty relief, if you voluntarily disclose amounts you failed to report and/or credits you overstated before the CRA contacts you or anyone who is related to you.

For details: Voluntary Disclosures Program

Exceptions to the federal and provincial or territorial penalties

There are 2 exceptions:

Quebec residents

Only the federal penalty will be applied as the provincial tax is assessed by Revenu Québec.

Non-residents and deemed residents of Canada

The provincial or territorial penalty will be applied only if provincial or territorial tax is payable.

False statements or omissions penalty

You may have to pay a penalty if you knowingly or under circumstances amounting to gross negligence, made a false statement or omission on your 2020 return.

The penalty is whichever is greater:

  • $100
  • 50% of the understated tax and/or the overstated credits related to the false statement or omission

The CRA may grant you penalty relief, if you voluntarily disclose amounts you failed to report and/or credits you overstated before the CRA contacts you or anyone who is related to you.

For details: Voluntary Disclosures Program

Request to cancel or waive penalties or interest

You can make a request to the CRA to cancel or waive penalties or interest if you are unable to meet your tax obligations due to circumstances beyond your control.

The CRA can only grant relief within a 10 year span from your request date.

For details: Cancel or waive penalties or interest

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