Tax penalties and fees
To avoid penalties and fees, ensure your return is accurate and file by the deadline for taxes and pay any balance owing on time.
You could end up paying additional penalties or fees if you:
- File your return late and owe taxes
- Owe taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition from previous years
- Make a false statement or omission
- Repeatedly fail to report all of your income on your tax return
Learn more below about these penalties and fees and what they could cost you.
Penalties for filing a late return
The first time you file late, you’ll be charged a late-filing penalty — 5% of the amount of tax you owe, plus 1% for every month that your return is late, for up to 12 months. That adds up to a maximum of 17% of the tax you owe.
You’ll also be charged interest on taxes you owe, at the prescribed interest rate. Interest is compounded daily. The prescribed interest rateInterest rate A fee you pay to borrow money. Or, a fee you get to lend it. Often shown as an annual percentage rate, like 5%. Examples: If you get a loan, you pay interest. If you buy a GIC, the bank pays you interest. It uses your money until you need it back.+ read full definition can change every three months.
If you file a late return again in the next three years, the penalties are doubled. You’ll be charged 10% of the balance you owe, plus an additional 2% you owe for each full month that your return is late, to a maximum of 20 months.
|First time filing late||5%||1%||12 months|
|Next time (within three years)||10%||2%||20 months|
If you owe tax from previous years
The CRA will keep charging you interest compounded daily on taxes you owe from previous years. Any tax payments you make will be applied first to your taxes from previous years.
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, or
- 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 all your income
If you fail to report an amount of $500 or more income on this year’s return, and you also failed to report an amount in any one of the previous three years, you may have to pay a federal and provincial penalty.
The penalty is the lesser amount of:
- 10% of the amount you failed to report (federal and provincial/territorial), or
- 50% of the difference between the understated tax (or overstated credits) related to the amount you failed to report, and the amount of tax withheld related to the amount you failed to report.
Learn more about interest and penalties.
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, they may waive some of these penalties. To qualify, you must meet these four 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 one 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.
If you owe tax:
1. File your tax return by April 30 to avoid paying late-filing penalties.
2. Pay the balance owing by April 30 to avoid paying interest.
3. Tell the CRA about any amount you didn’t report. They may decide to waive the penalties.