Circumstances that may warrant relief
Penalties or interest may be cancelled or waived in whole or in part when they result from circumstances beyond a taxpayer's control. Extraordinary circumstances that may have prevented a taxpayer from making a payment when due, filing a return on time, or otherwise complying with a tax obligation include, but are not limited to, the following examples:
- natural or human-made disasters, such as a flood or fire;
- civil disturbances or disruptions in services, such as a postal strike;
- serious illness or accident; and
- serious emotional or mental distress, such as death in the immediate family.
Actions of the Canada Revenue Agency (CRA)
The CRA may also cancel or waive penalties or interest when they result primarily from CRA actions, including:
- processing delays that result in taxpayers not being informed, within a reasonable time, that an amount was owing;
- errors in CRA material which led a taxpayer to file a return or make a payment based on incorrect information;
- incorrect information provided to a taxpayer by the CRA;
- errors in processing;
- delays in providing information, resulting in taxpayers not being able to meet their tax obligations in a timely manner; and
- undue delays in resolving an objection or an appeal, or in completing an audit.
Inability to pay or financial hardship
The CRA may, in circumstances where there is a confirmed inability to pay amounts owing, consider waiving or cancelling interest in whole or in part to enable taxpayers to pay their account. For example, this could occur when:
- a collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship;
- a taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or
- payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to cancelling all or part of the total accumulated interest.
Consideration would not generally be given to cancelling a penalty based on an inability to pay or financial hardship unless an extraordinary circumstance prevented compliance, or an exceptional situation existed. For example, when a business is experiencing extreme financial difficulty and enforcement of such penalties would jeopardize the continuity of its operations, the jobs of the employees, and the welfare of the community as a whole, consideration may be given to providing relief of the penalties.
For requests to cancel or waive interest or penalties based on an inability to pay or financial hardship, the CRA requires full financial disclosure from taxpayers, including a statement of income, expenses, assets, and liabilities. To help individual taxpayers provide full financial disclosure, please see Statement of Income and Expenses and Assets and Liabilities for Individuals . For businesses, please see Determining a business’ financial situation for information about the supporting documentation to submit with a request for relief.
The CRA may also grant relief if a taxpayer's circumstances do not fall within the situations described above.
- Cancel or waive penalties or interest
- Late, amended, or revoked elections
- Refund or reduce the amount payable beyond the normal three-year period
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