The CRA late-filing penalty is 5 percent of the balance owing on the date the return was due, plus 1 percent of that balance for each full month the return is late, up to a maximum of 12 months. If you have been assessed a late-filing penalty in any of the three previous years, the penalty doubles: 10 percent of the balance plus 2 percent per month for up to 20 months. On top of the penalty, arrears interest accrues at the prescribed rate (9 percent annual on overdue tax in Q2 2026), compounded daily. Filing on time even when you cannot pay avoids the penalty entirely.
The penalty rates
| Situation | Initial penalty | Per-month penalty | Maximum penalty (excl. interest) |
|---|---|---|---|
| First late filing in 3 years | 5% of balance owing | 1% per month | 17% (5% + 12 × 1%) |
| Late again, with prior late-filing penalty in past 3 years | 10% of balance owing | 2% per month | 50% (10% + 20 × 2%) |
| No balance owing (refund or zero) | $0 | $0 | $0 |
The repeat-filer penalty doubles both the initial percentage and the monthly rate, AND extends the maximum from 12 to 20 months. The total cost of three consecutive late filings can therefore reach 50 percent of the balance.
Interest in addition to penalty
Interest at the prescribed rate (9 percent on overdue personal income tax in Q2 2026) accrues from the original filing deadline (April 30 for most taxpayers; June 15 for self-employed). The rate updates quarterly. Interest compounds daily, so one year of unpaid balance grows by approximately 9.4 percent.
Worked example: $8,000 balance filed 5 months late
| Item | Amount |
|---|---|
| Balance owing on April 30 | $8,000 |
| Initial late-filing penalty (5%) | $400 |
| Per-month penalty (5 months × 1%) | $400 |
| Total late-filing penalty | $800 (10% of balance) |
| Interest (5 months on $8,000 at 9% annual) | $300 |
| Total payable when filed at month 5 | $9,100 |
If the same $8,000 balance is filed late a second time within three years, the penalty becomes $1,600 (10% + 5 × 2%), nearly double, plus the same $300 interest.
The “file on time even if you cannot pay” rule
Filing on time avoids the late-filing penalty entirely, even if you have not paid the balance. Interest still accrues on the unpaid balance, but the penalty does not. For a taxpayer with $20,000 owing who cannot pay, filing on April 30 saves up to $3,400 in penalty over a 12-month delay. The CRA payment arrangement process is also faster when the return is filed.
Repeat late filer trap
Many taxpayers file slightly late once and pay the 5 percent penalty without thinking much of it. If they file late again within three years, the penalty doubles to 10 percent. CRA’s repeat-filer flag is set automatically by the assessment system; it cannot be argued away by claiming the prior penalty was minor.
Special filing deadlines
| Deadline | Who applies |
|---|---|
| April 30 | Most individuals; balance owing always due regardless of filing deadline |
| June 15 | Self-employed individuals and their spouses (filing deadline only; tax owing still due April 30) |
| April 30 of year after death | Final T1 of a deceased individual; six months after death if later |
| March 31 | T3 trust returns (after recent deadline change for non-GRE trusts) |
| June 30 | T1135 Specified Foreign Property when individual filing deadline is June 15 |
Other related penalties
| Penalty | When it applies | Amount |
|---|---|---|
| Repeated failure to report income | Same income type omitted in current year and any of three prior years | 10% of unreported amount (federal) plus provincial portion |
| Gross negligence | CRA establishes that the taxpayer knowingly or with gross indifference understated income | 50% of the tax on the unreported amount, with $100 minimum |
| T1135 late filing (foreign property) | Specified Foreign Property cost > $100,000 not reported | $25 per day, max $2,500 per year, plus larger penalties for gross negligence |
| RC4288 instalment penalty | Instalment interest > $1,000 in a year | 25% of the lesser of (interest charged – $1,000) and (interest under no-calc method) |
Reducing or cancelling penalties
| Path | Detail |
|---|---|
| Taxpayer Relief (Form RC4288) | CRA may cancel penalties and part of interest where extraordinary circumstances, CRA delays, or financial hardship apply |
| Voluntary Disclosures Program (Form RC199) | For unfiled returns or unreported income discovered before CRA contact: 100% penalty relief and 75% interest relief in the General Program |
| Notice of Objection (Form T400A) | Dispute the assessment if the penalty was applied incorrectly (e.g., the return was on time) |
The cheapest path forward when you are behind
- File the return immediately. Filing stops the late-filing penalty from growing.
- Pay as much as you can. Interest accrues on the unpaid balance regardless of penalties.
- Set up a payment arrangement for any remaining balance, through CRA My Account or by phone.
- If extraordinary circumstances apply (illness, natural disaster), file a Taxpayer Relief request after the return is filed.
- Build a calendar reminder for April 30 going forward to avoid the repeat-filer doubling.
Cross-references
- CRA Payment Arrangement
- Taxpayer Relief: Cancelling CRA Penalties and Interest
- Voluntary Disclosures Program
- Tax Instalments: Who Pays Quarterly and How
Frequently asked questions
- What is the CRA late-filing penalty?
- 5 percent of the balance owing plus 1 percent per full month the return is late, up to 12 months. Maximum 17 percent of balance for a first-time late filer. Doubles to 10 percent plus 2 percent per month (up to 20 months) for a repeat late filer within 3 years.
- Is there a penalty if I file late but get a refund?
- No. The late-filing penalty is calculated as a percentage of the balance owing. If your balance is zero or you are owed a refund, the penalty is zero.
- Should I file even if I cannot pay?
- Yes. Filing on time avoids the late-filing penalty entirely. Interest still accrues on the unpaid balance, but the penalty itself only applies when the return is filed late.
- What is the prescribed interest rate on overdue tax?
- 9 percent annual on overdue personal income tax in Q2 2026 (April-June). The rate is set quarterly. Interest compounds daily, so one year of unpaid balance grows by approximately 9.4 percent.
- What is the repeat late-filer penalty?
- 10 percent of balance owing plus 2 percent per month for up to 20 months (maximum 50 percent), if you were assessed a late-filing penalty in any of the three prior tax years.
- Can the CRA cancel penalties?
- Yes, through the Taxpayer Relief program (Form RC4288) when extraordinary circumstances, CRA delays, or financial hardship apply. The original tax owing is not waived.
- Does the late-filing penalty apply to GST/HST too?
- Yes, with similar mechanics. GST/HST late filing carries an A x B + C formula penalty plus interest. CRA also applies a separate failure to file penalty after multiple notices.