What Happens if You File Your Income Tax Return Late

By Randall Orser | Personal Income Tax

Are you procrastinating about filing your tax return? Wondering what will happen if you file late?  Well what happens will depend on whether you have to pay this year or whether you will get a refund.

Late Filing Penalties:

Those who file individual tax returns late and have a balance owing to the CRA will be subject to a late filing penalty: 

  • 5% of your balance owing, plus
  • An additional 1% of your balance owing for each month your return is late up to a maximum of 12 months

If you have already been charged a late penalty in any of the three previous years, then your penalties for the current year will increase to:

  • 10% of your balance owing, plus
  • 2% of your balance owing for each month your return is late up to a maximum of 20 months

So, to save yourself money you need to file on time by the 30thof April.

Exceptional Circumstances That Can Result in Late Filing:

If you are filing late due to circumstances beyond your control, then the CRA may waive the late filing penalty and interest for more information see IC07-1: Taxpayer Relief Provisions. The CRA will considers the following exceptional circumstances:

  • If you have suffered a serious illness or accident
  • You in emotional distress from a divorce or death of a family member
  • You have suffered a disaster such as a flood, fire, or earthquake
  • If you are filing by mail and there is a disruption of service due to a mail strike

You may also be able to avoid penalties when your delay in filing is a result of action by the CRA such as:

  • Processing errors by the CRA
  • Incomplete or incorrect information on the return which has to be corrected or where the CRA asks for additional information
  • A CRA delay in processing which results in a late assessment of your balance owing
  • Delays caused as a result of reviews, audits, objections or appeals

Financial Hardship:

The CRA can also cancel all or some of your penalties and interest if your inability to pay is due to financial hardship caused by loss of employment, loss of business income, medical bills etc.  If you are unable to pay you will need to provide the CRA with detailed financial information including statements of assets, income, liabilities and expenses. 

If you are unable to pay the amount that you owe on your taxes by the filing deadline you should still file your return on time to avoid late filing penalties.  

From an article by Susan Ward

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President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.