Interest: The interest rate for any overdue taxes is 6%. If you have a balance owing for 2019, the CRA charges compound daily interest starting September 2, 2020, on any unpaid amounts. This includes any balance owing if the CRA reassesses your return. In addition, the CRA will charge you interest on the penalties starting the day after your filing due date. The rate of interest the CRA charges can change every three months according to their prescribed interest rates.

If you have amounts owing from previous years, the CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.

Late filing penalty: The CRA will charge you a late-filing penalty if you file your 2019 tax return after September 1, 2020, and you owe tax that remains unpaid at that time. The penalty is 5% of your 2019 balance owing, plus 1% of your balance owing for each full month your return was filed after September 1, 2020, to a maximum of 12 months.

If the CRA charged a late-filing penalty on your return for 2016, 2017, or 2018 your late-filing penalty for 2019 might be 10% of your 2019 balance owing, plus 2% of your 2019 balance owing for each full month your return was filed after September 1, 2020, to a maximum of 20 months.

Even if you cannot pay your full balance, you can avoid this penalty by paying on time.

Repeated failure to report income penalty: If you failed to report an amount on your return for 2019 and you also failed to report an amount on your return for 2016, 2017, or 2018, you may have to pay a federal and provincial repeated failure to report income penalty. If you did not report an amount of income of $500 or more for a tax year, it would be considered a failure to report income.

The federal and provincial penalties are each equal to the lesser of:

  • 10% of the amount you failed to report on your return for 2019
  • 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 the CRA about an amount you failed to report, the CRA may waive these penalties.

False statements or omissions penalty: You may have to pay a penalty if you, knowingly or under the circumstances amounting to gross negligence, have made a false statement or omission on your 2019 return.

The penalty is equal to the greater of:

  • $100
  • 50% of the understated tax and/or the overstated credits related to the false statement or omission

However, if you voluntarily tell the CRA about an amount you failed to report and/or credits you overstated, the CRA may waive this penalty.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only and is a general discussion of certain legal matters. It is not, and should not be taken as legal advice. You should not rely on or take or fail to take any action based on this information. If you require legal advice, we would be pleased to discuss resolutions to specific legal concerns you may have.
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