LATE FILING PENALTY
Interest
If you have a balance owing for the year, you are charged compound daily interest starting May 1 on any unpaid amounts owing. This includes any balance owing if your return is reassessed. In addition, you will be charged interest on the penalties starting the day after your return is due. The rate of interest you are charged can change every three months. If you have amounts owing from previous years, they will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
Late-filing penalty
If you owe tax and do not file your return on time, you will be charged a late-filing penalty. The penalty is 5% of your current tax year balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months.
If you were charged a late-filing penalty on your return for any of the previous three years your late-filing penalty for this year may be 10% of your current tax year balance owing, plus 2% of your current year balance owing for each full month that your return is late, to a maximum of 24 months.
Failure to File Income Tax & Penalties
If you owe tax for the current tax year and do not file your return on or before April 30, then the CRA may impose penalties and interest. They will charge you a late-filing penalty. The penalty is 5% of your current year balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. Your late-filing penalty may be higher if you were charged a late filing penalty in any of three previous years. Liberty Tax Canada strongly suggests that, even if you cannot pay the entire amount on April 30, that you still file to avoid the late filing penalty.
Our Tax Specialists are prepared to help you. Please contact your local Liberty Tax Canada office for more information.