File on Time to Avoid Penalties

by Craig Anthony

1 min read

If you file your tax return late, the Canada Revenue Agency charges a penalty. As of 2017, the penalty is 5% of the tax owed plus an additional 1% per month. For example, if you owe $5,000 in income tax and you file three months late, you face an 8% penalty ($400). To discourage late payments, the CRA doubles the penalty if you have filed late in the last three years. In addition, you also have to pay interest on the tax owed. Even if you don’t have the funds to pay your income tax, you should still try to file on time so you can avoid the late filing penalties; you only have to deal with interest. If your return is already late, you can use Form RC4288 to ask the CRA to waive penalties and interest. The CRA grants waivers to taxpayers who can’t file on time due to disasters, civil disturbances, serious accidents, or severe emotional distress. If you don’t have all the forms you need, consider filling out your return and attaching a note explaining which forms you’re missing and the steps you have taken to get them. For example, if you’re an independent contractor and you’re missing a T4A slip from a payer, you may want to take these steps instead of filing late. Filing your income tax return late can be extremely costly. To avoid fees, try to keep your books well-maintained through the year to make tax time easier.

References & Resources

Related Articles

Overwhelmed By Penalties and Interest: Use Form RC4288 To Request Relief

If you file your taxes late, forget to report income, or have…

Read more

Who Needs to File a Tax Return?

The rules for filing a tax return in Canada are not entirely…

Read more

3 Things You Can Do to Put More Tax Money in Your Pocket

If you’re a small business owner, you know that taxes can be…

Read more