Did you know? If you file your taxes late in Canada, the Canada Revenue Agency (CRA) charges a penalty of 5% of your unpaid taxes right off the bat. If you want to avoid hefty fines keep on reading.
Well, let’s talk about what happens when you’re filing taxes late in Canada in 2025 and what kind of hit your wallet might take. Follow our tips to avoid penalties for late tax filing in Canada
What Happens If You Miss the Tax Deadline?
Missing the deadline means you’re now facing the late filing penalty from CRA enforced every year.
Here’s what happens:
- You owe 5% of your unpaid taxes right away.
- Then, add 1% for every month you’re late, up to 12 months.
- If you were also late in the past three years, the penalty jumps to 10% of the balance you owe, plus 2% per month for each full month you file after the due date. This additional 2% can be charged up to a maximum of 20 months.
So yeah, penalties for late filing of tax return can add up. And don’t forget the interest. CRA charges daily compound interest on top of it all.
But What If I Don’t Owe Anything?
If you don’t owe taxes, the CRA does not charge a late-filing penalty. The penalty only applies when you have a balance owing and miss the deadline.
But here’s the thing—what if you’re wrong and you do owe something? If you guessed wrong, you’ll still get hit with the penalty for late tax filing plus interest. It’s a bit of a gamble.
Also, even if you don’t owe, you might be leaving money on the table. Benefits like GST/HST credits or the Canada Child Benefit require you to file on time. No return, no payment.
Penalty for Late Tax Filing with Interest
So you missed the deadline. You now owe a penalty for filing taxes late. But wait—there’s more! You’ll also pay interest on what you owe. The CRA charges daily interest starting the day after the due date. And it adds up fast.
So, not only are you getting the late filing penalty, but you’re also paying interest on your unpaid taxes and your penalty. That’s a rough combo.
CRA Updates in 2025 You Should Know
Now, 2025 is a little different. The CRA has made some changes in 2025. For folks who have to report capital gains, you get a bit of breathing room. If you’re an individual and you’re reporting capital gains, the CRA is giving you until June 2, 2025. That’s an extension without the penalty for late tax filing or interest.
If you’re a trust reporting capital gains, you have until May 1, 2025.
That said, don’t take this as a free pass. These exceptions are pretty specific. If your situation doesn’t fall under these categories, you’re still looking at that classic penalty for late tax return.
Step-by-Step Guide: What To Do If You Get Penalty for Late Tax Filing
So you missed the deadline. What now? Don’t stress—here’s a plan:
1. File ASAP
Even if you can’t pay yet, file your return right away. You’ll avoid that 5%–10% penalty getting worse by the month. Submitting now stops the bleeding.
2. Figure Out What You Owe
Use the CRA’s online account to check your balance. Or if you want to estimate it, use an online penalty calculator. These tools give you a quick ballpark of what you’ll pay in CRA penalties on late filing and interest.
3. Set Up a Payment Plan
Can’t pay the full amount? No biggie. CRA offers payment arrangements. File first, then contact them to set it up. It’s way better than ignoring the bill.
4. Request Relief If You Have a Good Reason
If you were sick, lost your job, or had a death in the family—ask CRA for relief. You might qualify to get the fine for late tax return or interest waived.
5. Talk to a Pro
Not sure where to start? Reach out to tax professionals like Bestax. They’ll walk you through everything and help you avoid any more penalties.
Proactive Tips: How to Avoid Penalty for Late Tax Filing
Let’s be honest—no one wants to go through this again. Here’s how to stay ahead of the game next time:
Apply for Waiver Timely
Sometimes, life happens. You lose your job. You get sick. You’re just overwhelmed. If something outside your control caused the delay, the CRA might cut you some slack. There’s a program where you can ask them to cancel or waive the fine for filing taxes late or interest.
You’ll need to explain your situation and show proof. They don’t approve everyone, but if you’ve got a good reason, it’s worth a shot.
Why People File Late
Let’s be real for a second. A lot of us don’t file on time just because we forget. Or we’re scared we’ll owe money we don’t have. Or we just keep putting it off.
But filing taxes late in Canada doesn’t make things go away. It actually makes things worse. The CRA is more likely to work with you if you file and then talk to them about how to pay. Avoiding them? That’s what gets you those scary letters and bigger bills.
Payment Plans Exist
Can’t pay what you owe? The CRA lets you set up a payment plan. That way, you’re not buried in interest and CRA penalties on late filing. You just need to file your return and reach out.
Seriously, don’t let fear stop you from filing. You have more options when you’re honest and upfront.
Reminder: File Even If You Can’t Pay
This one’s important. Even if you can’t pay your taxes, FILE THEM. Why? Because filing late is what triggers the big penalty for late tax filing. If you file on time but can’t pay right away, you only deal with interest. That’s way better than a double-whammy of interest plus a fine for late tax return.
Don’t Forget About Repeated Offenders
If you’re late over and over again, the CRA will not take it easy on you. This is called a repeated failure to report income. You can get hit with even more CRA penalties on late filing, especially if they think you’re trying to dodge taxes.
It’s not just about being late. It’s about whether they believe it’s becoming a pattern. Don’t get labeled that way. It’s hard to undo.
Last-Minute Tips
If you’re close to the deadline, don’t wait! File online. It’s fast. And you get confirmation it went through. Even if you don’t have all your slips, file something. You can always make changes later.
Filing something is better than submitting taxes late and getting stuck with a late tax return fine.
Use a Professional
Tax Experts like Bestax can save you time, money, and stress. They know the rules, keep up with CRA changes, and help you file right the first time.
Estimate Your Penalty: Use a Calculator
There are free tools online where you can estimate your penalty for filing taxes late in Canada. Just plug in:
- How much tax you owe
- How many months late you are
- If this is your first time or not
It’ll give you an estimate of the late tax return fine so you’re not guessing.
A quick search for “CRA penalty calculator” can help you find one, or ask your accountant to run the numbers for you.
Let the Best at Bestax Help You Out
If you’re overwhelmed, confused, or just don’t want to deal with it, we get it. Filing taxes, especially if you’re submitting taxes late in Canada, can feel like a lot. That’s why it’s smart to get a tax pro in your corner.
Bestax has a team of experienced, friendly accountants who specialize in personal taxes and corporate taxes. Whether you missed the deadline, can’t pay your taxes, or just want someone else to handle it all—they’ve got you covered.
They’ll:
- File your return quickly
- Help reduce or avoid penalty for late tax filing
- Deal with the CRA on your behalf
- Set up payment plans
- Explain everything in plain English (no confusing jargon)
Why stress when you can hand it off to people who do this every day?
Call Bestax today or book your consultation online. Don’t let a late tax return cost you more than it has to.
Frequently Asked Questions About Penalty for Late Tax Filing
1. What happens if you file taxes late?
If you file your tax return after the due date and have a balance owing, the Canada Revenue Agency (CRA) will charge a late-filing penalty. This penalty is 5% of your balance owing, plus an additional 1% for each full month your return is late, up to a maximum of 12 months. Additionally, interest will be charged on any unpaid amounts starting the day after the due date.
2. What happens if you don’t pay CRA installments?
If you are required to pay tax by installments and you either do not pay, pay late, or pay less than the required amount, the CRA will charge installment interest. If your installment interest exceeds $1,000, you may also be subject to an installment penalty. The penalty is calculated by subtracting $1,000 or 25% of the installment interest (whichever is greater) from the installment interest charges, and then dividing the difference by two.
3. If you don’t file taxes, what happens?
Failing to file your tax return can lead to several consequences, including:
- Late-filing penalties and interes
- Loss of benefits
- Legal action
4. When is the tax deadline in Canada?
For most individuals, the deadline to file your income tax and benefit return is April 30. If you or your spouse or common-law partner are self-employed, you have until June 15 to file; however, any balance owing is still due by April 30 to avoid interest charges. Since June 15, 2025, falls on a Sunday, the CRA will consider your return filed on time if they receive it on or before June 16, 2025.
5. What is the penalty for filing an income tax return late?
The penalty for filing your income tax return late is 5% of your balance owing, plus an additional 1% for each full month your return is late, up to a maximum of 12 months. If you were subject to a late-filing penalty in any of the three previous tax years, the penalty increases to 10% of your balance owing, plus 2% for each full month your return is late, up to a maximum of 20 months.
6. When are Canadian taxes due?
For most individuals, Canadian taxes are due by April 30. If you have a balance owing, it should be paid by this date to avoid interest charges. Self-employed individuals and their spouses or common-law partners have until June 15 to file their returns, but any taxes owed are still due by April 30. Since June 15, 2025, falls on a Sunday, the CRA will consider your return filed on time if they receive it on or before June 16, 2025.
7. How much interest does CRA charge for late payments?
The CRA charges compound daily interest on any unpaid amounts starting the day after the due date. The interest rate is determined every three months and is based on prescribed interest rates. For the second quarter of 2025, the interest rate charged on overdue taxes is 8%.
8. Can you go to jail for not filing taxes in Canada?
Yes, failing to file tax returns can lead to criminal charges. Upon conviction, individuals may face fines ranging from 50% to 200% of the taxes evaded and imprisonment for up to five years.
9. What happens if you miss the tax deadline?
Missing the tax deadline can result in late-filing penalties and interest charges on any balance owing. Additionally, it may delay your benefit and credit payments. It’s advisable to file as soon as possible to minimize these penalties and avoid further consequences.
10. What happens if you file your taxes late but don’t owe anything?
If you file late but don’t owe any taxes, you won’t face late-filing penalties. However, filing late may delay your benefit and credit payments, such as the GST/HST credit and the Canada Child Benefit. It’s still recommended to file on time to ensure timely receipt of any benefits.
Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.
