Penalties for not reporting income
You will have to pay a penalty if you repeatedly fail to report all of your income or make a false statement or omission on your tax return.
If you don't report all of your income
If you fail to report an amount on this year's return and you also failed to report an amount in any 1 of the previous 3 years, you may have to pay a federal and provincial penalty. This is called the repeated failure to report income penalty.
- a federal penalty of 10% of the unreported amount, plus
- a provincial penalty of the same amount.
If you make a false statement or omission
You may also have to pay a penalty if you knowingly make a false statement or omission on your tax return.
The penalty is the greater of:
- $100, and
- 50% of the understatement of tax and/or the overstatement of credits related to the false statement or omission.
If you repeatedly fail to report any of your income on your tax return, you'll pay a 10% federal penalty plus a 10% provincial penalty on the unreported amount.
If you voluntarily tell the Canada Revenue Agency (CRA) about an amount you failed to report, it may waive some of these penalties. To qualify, you must meet these 4 conditions:
- You must approach the CRA yourself. If the CRA discovers the oversight and contacts you, you will not qualify for any relief.
- You must offer complete and full information.
- You must be facing a penalty.
- In most cases, the outstanding information must be more than 1 year overdue.
To disclose your situation, complete Form RC199 and include any supporting documents. Even if the CRA waives the penalties, you'll still have to pay the taxes plus interest.
Learn more about the CRA's Voluntary Disclosures Program.