Penalties

This page provides information (including a table of penalties and frequently asked questions) about penalties for late or improperly filed forms and information returns.

Failing to file

The penalty for failing to file a return is $25 per day for up to 100 days (minimum $100 and maximum $2,500). This penalty does apply to Form T1142.

When failing to file is done knowingly or under circumstances amounting to gross negligence, the penalty is $500 per month for up to 24 months (maximum $12,000), less any penalties already levied. This penalty does not apply to Form T1142.

After 24 months, the penalty is 5% of whichever of the following resulted in the requirement to file the information return, less any penalties mentioned above already levied:

• the cost of the foreign property
• the fair market value of the property transferred or loaned to the trust
• the cost of the shares and indebtedness of the foreign affiliate

The CRA may issue a demand to file a return to a person or partnership under subsection 233(1) of the Income Tax Act. If so, and if the person or partnership knowingly or under circumstances amounting to gross negligence fails to comply with the demand, the penalty is $1,000 per month for up to 24 months (maximum $24,000), less any penalties already levied. This penalty does apply to Form T1142.

False statements or omissions

A penalty applies to people who knowingly or under circumstances amounting to gross negligence make false statements or omissions in an information return.

For Form T1142, the penalty is the greater of either:

• $2,500 or
• 5% of whichever of the following false statement or omission was made about:
  • the fair market value of the distributed property or
  • the indebtedness

For the other information returns, the penalty is the greater of either:

• $24,000 or
• 5% of whichever of the following false statement or omission was made about:
  • the cost of the foreign property
  • the fair market value of the property transferred or loaned to the trust or
  • the cost of the shares and indebtedness of the foreign affiliate

Due diligence exception for penalties

The penalty for omissions on Forms T1134 and T1141 does not apply to taxpayers who make diligent efforts to get the requested information and who:

• disclose in the return the unavailability of the information and
• file the information within 90 days of it later becoming available

Forms and publications

• Form T1134, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates
• Form T1135, Foreign Income Verification Statement
• Form T1141, Information Return in Respect of Contributions to Non-Resident Trusts, Arrangements or Entities
• Form T1142, Information Return in Respect of Distributions From and Indebtedness to a Non-Resident Trust

Related topics

• Questions and answers about penalties (Frequently asked questions)
• Table of penalties