Filing Taxes Late in Canada: Penalties, Interest and How to Catch Up

Missing the tax deadline is common, and it is fixable. What it costs depends mainly on one thing: whether you owe tax. This guide explains CRA’s penalties and interest, what happens if you’re owed money, the relief CRA can grant, and how to catch up if you’re behind by more than one year.

If you owe tax: the late-filing penalty

If you file after the deadline and have a balance owing, CRA charges a late-filing penalty of:

• 5% of the balance owing, plus
• 1% of the balance owing for each full month the return is late, up to 12 months.

Example: you owe $2,000 and file four full months late. The penalty is 5% ($100) plus 4 × 1% ($80), a total of $180, before interest.

The repeated late-filing penalty

The penalty is higher for repeat late filers. If CRA charged you a late-filing penalty in any of the three previous years and sent you a formal demand to file, the penalty becomes 10% of the balance owing plus 2% for each full month late, up to 20 months.

Interest on unpaid tax

Interest is separate from the penalty. CRA charges daily compound interest on any unpaid balance from the day after it was due until it is paid in full.

That is why filing on time matters even if you can’t pay. Filing on time avoids the late-filing penalty, so only interest applies to the unpaid amount.

If you’re owed a refund or owe nothing

The late-filing penalty is a percentage of your balance owing, so if you don’t owe, there’s no late-filing penalty. Filing late still has costs:

• your refund isn’t paid until the return is processed, and
• benefit and credit payments can be interrupted, including the Canada Groceries and Essentials Benefit (formerly the GST/HST credit), the Canada Child Benefit and Old Age Security.

Many people with low or no income only get these payments by filing. If that’s you, filing late means going without money you’re entitled to.

Behind by several years? How to catch up

1. Gather your slips for each missing year. If you’ve lost them, you may be able to see current and prior-year slips in CRA My Account once the issuers have sent them to CRA. Our tax documents checklist covers what else you’ll need.
2. File every missing year. Each year is a separate return. If you’re owed money for one year and owe for another, CRA may apply refunds or other federal payments you’re owed to the balance.
3. Deal with any balance owing. If you can’t pay in full, you can schedule a series of pre-authorized debit payments in your CRA account, or call CRA to set up a payment arrangement. Once an arrangement is in place, you must keep filing future returns on time.
4. Respond to CRA letters. If you’ve received a demand to file or another CRA letter, don’t ignore it. Our guide to understanding CRA notices explains what each type means.

Can penalties and interest be cancelled?

Sometimes. CRA has two relief routes:

• Taxpayer relief. CRA may cancel or waive penalties and interest when events beyond your control prevented you from meeting your obligations. A request must be made within a 10-year period ending in the calendar year you make it. CRA decides each request individually.
• The Voluntary Disclosures Program (VDP). It grants relief case by case to people who come forward to fix errors or omissions in their tax filings. Eligibility conditions apply, and the program was changed effective October 1, 2025.

Neither is automatic. We can’t promise any penalty will be waived; that decision rests with CRA. What we can do is help you decide whether a request makes sense and prepare it properly.

Self-employed or a business?

The same principles apply to business income, and to GST/HST and payroll accounts, which have their own penalty rules. If you’re registered for GST/HST and behind on returns, see our guide to GST/HST payments to the CRA. Or talk to our self-employed tax team.

Get help catching up

We regularly prepare prior-year and late returns and can deal with CRA on your behalf once you authorize us as your representative. Visit our Scarborough office, or file remotely from anywhere in Canada through our remote tax filing service. Call (437) 410-7999 to talk through your situation. For the key dates this year, see our Canadian tax deadlines guide. To have us prepare your return, see our personal tax services.

Sources: Canada Revenue Agency — Interest and penalties on late taxes; Filing due dates; Line 48500 Balance owing; Arrange to pay your debt over time; Cancel or waive penalties and interest; Voluntary Disclosures Program; Tax slips.