For most Canadians, the deadline to file their 2017 income tax return is at midnight April 30. The Canada Revenue Agency wants everyone’s return by then, but it’s the people that owe them money that they’re really concerned about (not the people, but the money).
The CRA has the power of the law behind it to get what it is owed. Lives can be upturned, and it all starts with a simple missed deadline.
If you have a balance owing for 2017, CRA charges compound daily interest starting May 1, 2018, on any unpaid amounts owing for 2017. This includes any balance owing if CRA reassesses your return. In addition, CRA will charge you interest on the penalties starting the day after your filing due date. The rate of interest CRA charges can change every three months.
If you have amounts owing from previous years, we will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
If you owe tax for 2017 and you file your return for 2017 after the due date, CRA will charge you a late-filing penalty. The penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
If CRA charged a late-filing penalty on your return for 2014, 2015, or 2016 your late-filing penalty for 2017 may be 10% of your 2017 balance owing, plus 2% of your 2017 balance owing for each full month your return is late, to a maximum of 20 months.
Even if you cannot pay your full balance owing on or before April 30, 2018, you can avoid the late-filing penalty by filing your return on time.
Repeated failure to report income penalty
If you failed to report an amount on your return for 2017 and you also failed to report an amount on your return for 2014, 2015, or 2016, you may have to pay a federal and provincial or territorial repeated failure to report income penalty. If you did not report an amount of income of $500 or more for a tax year, it will be considered a failure to report income.
The federal and provincial or territorial penalties are each equal to the lesser of:
- 10% of the amount you failed to report on your return for 2017; and
- 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.
However, if you voluntarily tell CRA about an amount you failed to report, CRA may waive these penalties. For more information, see Voluntary Disclosures Program.
- For residents of Quebec, only the federal penalty will be applied as the provincial tax is assessed by Revenu Québec.
- For non-residents and deemed residents of Canada, the provincial or territorial penalty will be applied only if provincial or territorial tax is payable.
False statements or omissions penalty
You may have to pay a penalty if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your 2017 return.
The penalty is equal to the greater of:
- $100; and
- 50% of the understated tax and/or the overstated credits related to the false statement or omission.
However, if you voluntarily tell us about an amount you failed to report and/or credits you overstated, CRA may waive this penalty.
Cancel or waive penalties or interest
The CRA administers legislation, commonly called the taxpayer relief provisions, that gives the CRA discretion to cancel or waive penalties or interest when taxpayers are unable to meet their tax obligations due to circumstances beyond their control.
The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a request is made.
For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to a penalty for a tax year or fiscal period ending in 2008 or later.
For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to interest that accrued in 2008 or later.