CRA Late Filing Penalty: Everything You Need to Know

CRA late filing penalties and interest can accumulate quickly on a CRA debt. CRA Interest compound daily and can change every three months. Penalties such as the late-filing penalty can end up adding up to and above 17%. There are options for tax relief however. Contact Farber Tax to find out how.

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CRA Late Filing Penalty Details to Pay Attention To

 

If you are required to file Canadian income taxes with the Canada Revenue Agency (CRA) then you are also required to file them by certain deadlines. If you miss these deadlines, there are consequences. One of the major consequences is CRA penalties.

Most individuals have a deadline of April 30th to file their personal income taxes for the previous year. If you do not file by this deadline, and you owe money, you will be charged a CRA late filing penalty. This penalty will be 5% of the balance owing, plus one percent of the balance owing for each full month your return is late, up to a maximum of 12 months.

In addition, if you don’t pay your taxes when they are due, the CRA begins to charge compound interest daily on any unpaid amounts. The interest rate charged by the CRA can change every three months.

As you can see, the costs of filing your tax returns late (and not paying your taxes when they are due) can be very high. In fact, if you were charged a CRA late filing penalty in any of the previous three tax years and you file late again, your penalty may be even higher. It could be 10% of your tax balance owing, plus 2% of your balance for each full month your return is late, to a maximum of 20 months.

 

Avoiding CRA Penalties

 

If you owe a large tax bill, you might think that your best option is to avoid filing and hope that the CRA doesn’t catch you. The reality is that this strategy will not work. The CRA doesn’t “forget” about people and they will find you. When they do, you will be charged significant penalties.

Large interest charges and penalties can make an already high tax bill even more difficult to pay off. Therefore, it’s in your best interest to avoid these penalties all together.

The best way to avoid being charged CRA penalties is to file your taxes on time. Even if you can’t pay what you owe right away, at least you will avoid a CRA late filing penalty.

 

Help Eliminating a CRA Late Filing Penalty

 

In some situations, you may be able to request relief from penalties with the CRA. However, the CRA will only eliminate penalties and interest charges if you were not able to file on time due to extraordinary circumstances that were beyond your control. For instance, if you suffered a medical emergency, went through a natural disaster, or were unable to file due to CRA delays, you may qualify to have penalties reduced.

If this is the situation that you are in, it is in your best interest to work with a professional when requesting relief. An experienced tax professional will give you the best possible chance at having CRA penalties and interest waived.

When applying, you will need to clearly outline why you are requesting relief and supply enough documentation to support your claim. Making an error on your application can result in a rejection of your application, so it is best to have a professional assist you. Contact us today for more information on how we can help

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I would highly recommend the services of the Farber Tax team! James spent time listening to my situation and recommending a course of action, I accepted his help right away. Scott was my go to in the office and guided us through our CRA nightmare. He took over all communications with the CRA even though we had an extremely aggressive collector harassing my family for payment. This collector would call multiple times a day both myself, my wife and Scott. It got so bad that Scott had this individual removed from our file and a reprimand of the collectors behavior was sent in to his superiors. Fortunately we came to a reasonable payment arrangement and a much better collector. I’m happy to say we only have one more payment and we will be caught up. The power the CRA holds over individuals is unbelievable. I could not believe we had to experience this treatment and I firmly believe Scott saved the day, our sanity and our financial future. This company knows their stuff, and again, I highly recommend them to be in your corner.

Farber Tax Solutions can help you successfully deal with CRA collections. We utilize the experience of our ex-CRA professionals to:

  • 1| remove existing collections action;
  • 2| prevent future collections actions; and
  • 3| help implement an affordable payment arrangement that is acceptable to the CRA.

In some cases, collection actions can even be postponed altogether. Our staff have over 30 years of combined experience working at the CRA and utilize their insider knowledge to help secure the best deal for you.