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Penalties for Filing Taxes Late: How to Avoid and Reduce Them

Mark Virgil Lofranco • 27 November 2024

The Canada Revenue Agency (CRA) requires taxpayers to file their income tax returns by April 30 each year, or the next business day if it falls on a weekend or holiday. However, if you miss the deadline, you will only face a late filing penalty if you owe taxes. When you owe taxes and miss the deadline, penalties and interest start to accumulate.



No one likes paying extra, so here’s what you need to know about filing your 2023 tax return late and how to manage the consequences.


When is the 2023 Tax Deadline?


The deadline for filing 2023 tax returns is April 30, 2024. If you owe taxes, it’s essential to file and pay any amounts due by this date to avoid penalties and interest. Business owners and self-employed individuals have until June 17, 2024, to file their returns, but they must still pay any taxes owed by April 30.


Can You File Taxes After the Deadline?


Yes, you can file after the deadline. If you don’t owe any taxes, there won’t be any penalties. However, if you are eligible for refunds or benefits like the GST/HST credit or Canada Child Benefit (CCB), late filing may delay those payments.


What Happens If You File Late?


If you owe taxes and file late, the CRA will charge penalties and interest. This can also delay or disrupt the benefits and credits you may be entitled to, such as:


  • GST/HST credits
  • Canada Child Benefit (CCB)
  • Old Age Security (OAS) benefits


Even if you don’t owe taxes, there are reasons to file, such as qualifying for a refund, building RRSP contribution room, and receiving your Notice of Assessment (NOA) for loans or mortgages.


Penalties for Filing Late


If you owe taxes and file late, the penalty is 5% of your balance owing plus 1% for each month your return is late, up to 12 months. If you’ve been late before (e.g., within the last three years), penalties increase to 10% plus 2% per month, up to 20 months.

For example, if you owe $10,000 and file five months late, your penalty would be 10%, or $1,000, making your total amount due $11,000.


Additional Penalties for Businesses and the Self-Employed


Self-employed individuals and small business owners have more tax forms to file, such as payroll or GST/HST remittances, and penalties apply for filing late. The CRA imposes significant penalties for late payroll remittances—up to 20% for repeat offenses—and late GST/HST returns also incur penalties based on a specific formula.


Instalment Interest Charges


If you’re required to make tax instalments throughout the year (typically for those who owed more than $3,000 the previous year), you must pay on time to avoid interest charges. Missing these deadlines can result in instalment interest or penalties if charges exceed $1,000.


Filing Late Tax Returns in Canada


You can file a late return online, through a tax professional, or by mail. Remember that if you owe taxes, penalties and interest will increase the amount you need to pay. If you’re catching up on multiple years of missed returns, file the oldest first to maximize any carry-forward deductions, like:


  • Unused tuition credits
  • Non-capital losses
  • Donations
  • RRSP contributions


Taxpayer Relief for Penalties


Penalties for filing late are not tax-deductible, but relief is possible. You can apply for the CRA’s taxpayer relief program using form RC4288, which allows you to request waiving penalties or interest due to extraordinary circumstances, such as natural disasters or financial hardship.


By understanding the consequences and your options, you can avoid extra fees and penalties—and if necessary, mitigate them through the right actions.


Key Takeaways:

  • Filing taxes late can lead to penalties and interest charges, and not filing can affect your eligibility for refunds, benefits, and credits.
  • Even if you're late, you can still file online or through an accountant. However, be prepared for penalties if you owe money.
  • Consider requesting relief through CRA form RC4288 if you're facing financial hardship or exceptional circumstances.

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