Interest and penalties on late taxes

You will be charged interest on any taxes you owe if you pay late. Also, if you have a balance owing and file your tax return late, you will be charged a late-filing penalty.

Interest on taxes you owe

If you have a balance owing for the 2021 tax year and are unable to pay it by the April 30 payment due date, the CRA will start charging you compound daily interest as of May 1, 2022. This includes any balance owing if your return has been reassessed.

The rate of interest the CRA will charge on current or previous balances can change every 3 months based on prescribed interest rates.

COVID-19 benefit related interest relief on 2020 taxes owing

If you received COVID-19 benefits in 2020 and were eligible, the CRA did not start charging interest on your 2020 taxes owing until April 30, 2022. For details: COVID-19 related interest relief on 2020 taxes

Tax instalment interest

If the CRA requires that you pay tax instalments, you will need to pay by the set instalment payment due dates. If you miss any of these payment dates, you may need to pay instalment interest.

Penalty for filing your tax return late

If you file your tax return after the due date and have a balance owing, you will be charged a late-filing penalty. Filing late may also cause delays to your benefit and credit payments.

If you cannot pay your balance owing, you should still file on time to avoid being charged the late-filing penalty.

The late-filing penalty is 5% of your 2021 balance owing, plus an additional 1% for each full month you file after the due date, to a maximum of 12 months.

If the CRA charged a late-filing penalty for 2018, 2019 or 2020 and requested a formal demand for a return, your late-filing penalty for 2021 will be 10% of your balance owing. You will be charged an additional 2% for each full month that you file after the due date, to a maximum of 20 months.

The late filing penalty still applies when you get interest relief if you received COVID-19 benefits.

Tax instalment penalty

You may have to pay a penalty if your instalment payments are late or less than the required amount. The CRA applies the instalment penalty only if your instalment interest charges for 2022 are more than $1,000.

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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