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

Mark Virgil Lofranco • 29 October 2024

What Happens If You File Taxes Late in Canada and How to Reduce Penalties


The Canada Revenue Agency (CRA) requires individual taxpayers to file their income tax returns by April 30 each year, or the next business day if that date falls on a weekend or holiday. However, sometimes life gets in the way, and the deadline passes without you filing. If you owe taxes, missing the deadline means you could face penalties. If you don’t owe taxes, while no penalty applies, filing late could delay important benefits and credits.


To help you avoid extra fees and manage your tax obligations, here’s what you need to know about filing your 2023 taxes on time—or what happens if you file late in Canada.


Tax Filing Deadline for 2023 Returns



The filing deadline for 2023 taxes is April 30, 2024. If you owe taxes, you must file and pay your balance by this date to avoid penalties and interest charges.

For self-employed individuals, although the filing deadline is June 15 (extended to June 17, 2024, due to the weekend), any taxes owed are still due by April 30, 2024. Paying by this date helps you avoid interest charges, so getting organized early is key.


Can You File Taxes After the Deadline?


Yes, you can file taxes after the deadline. However, if you owe money, the CRA will charge interest and penalties on your outstanding balance. Additionally, if you qualify for benefits like the Canada Child Benefit (CCB) or the GST/HST credit, filing late can disrupt these payments until your return is processed.


Penalties for Filing Taxes Late in Canada


If you owe taxes and file late, the CRA imposes penalties. For first-time late filers, the penalty is 5% of the balance owed, plus 1% for each month your return is late (up to 12 months).

For repeat late filers who were charged penalties in previous years, the penalty increases to 10% of the balance, plus 2% for each month you’re late, to a maximum of 20 months.

If you’ve missed several years of taxes, the CRA will apply payments to your oldest debts first, which can add up quickly in penalties and interest.


What Happens If You're Self-Employed?


Self-employed individuals must submit additional returns, such as payroll remittances and GST/HST filings, and are subject to similar penalties. Even though you have until June 15 to file your income tax return, any balance owed is due by April 30 to avoid penalties.

  • Payroll remittances: If payroll taxes are not submitted on time, the CRA imposes a 10% penalty for the first missed payment, and up to 20% for further missed remittances.
  • GST/HST filings: Late filing of GST/HST returns also incurs penalties, calculated as 1% of the amount owed, plus 25% of 1% per month the return is late.


Does the CRA Charge Interest on Late Installments?


Yes, the CRA charges interest on late tax instalments. Taxpayers who owe more than $3,000 in taxes in the previous year may be required to make quarterly instalments throughout the current year. Failing to make these instalments on time can result in interest charges, and if the instalment interest exceeds $1,000, an additional penalty may apply.


How to File a Late Tax Return


You can file a late tax return the same way as an on-time return, either online or through an accountant. If you haven’t filed for several years, it’s best to start with the oldest return first, as you might benefit from carry-forward amounts such as:


  • Tuition fees
  • Non-capital losses
  • RRSP contribution room
  • Donations and gifts

These amounts can help reduce your tax liability when you file for subsequent years.


Late-Filing Penalties Are Not Tax-Deductible


Unfortunately, late-filing penalties are not tax-deductible in Canada. However, if you’re facing extraordinary circumstances like a natural disaster or financial hardship, you can apply for relief from penalties and interest using form RC4288. The CRA may grant relief if your situation meets certain criteria, such as experiencing a flood or wildfire.

By understanding these rules and proactively managing your tax obligations, you can minimize or avoid penalties and ensure a smoother tax filing process.


Key Takeaways:


  • Filing your taxes late can lead to CRA penalties and interest charges, but not filing at all can disrupt refunds, benefits, and credits.
  • Late returns can still be filed online or through an accountant. If you owe taxes, however, late filing could result in higher balances due.
  • Consider applying for penalty or interest relief using form RC4288 if you face financial hardship or extraordinary circumstances.

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