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Penalties and interest

Type of penalty When it applies Amount charged
Failure to file Any return you file late unless:
  • there is a $0 amount owing; or
  • we owe you a refund.
 A + (B × C)

where

A is 1% of the amount owing;
B is 25% of A; and
C is the number of months the return is overdue, to a maximum of 12 months.
Demand to file If you receive a demand to file and do not do so. $250
Failure to file electronically If you are required to file electronically and do not do so (see Mandatory electronic filing for most GST/HST registrants). $100 for the initial return not filed electronically;

$250 for each subsequent return not filed electronically.
Failure to accurately report information For electronically filed returns:
  • information that must be included, but was not;
  • amounts (see below) that are over or under reported; or
  • amounts (see below) that are reported incorrectly.

The amounts include:

  • recaptured imput tax credits (RITCs);
  • grandparented sales of housing in Ontario, Nova Scotia and B.C. where the purchaser was not entitled to claim a GST/HST new housing rebate, new residential rental property rebate, or the Nova Scotia new housing rebate;
  • resales of housing that are subject to the HST at 13% in Ontario, 12% in BC or 15% in Nova Scotia where the housing was originally purchased on a grandparented basis;
  • the transitional tax adjustment (for Ontario and BC); and
  • provincial transitional new housing rebates (for Ontario and BC).
 Generally 5% of the amount plus 1% per month, until the amounts are corrected (to a maximum of 10%), of the difference between what is reported and what should have been reported.

Note
You cannot claim an income tax deduction for any penalty paid or payable for failing to file a GST/HST return.

If you are a financial institution who is also required to file Form GST111, Financial Institution GST/HST Annual Information Return, be aware that there are additional penalties associated with failures to properly report information on that return. Penalties for non-compliance accumulate and can be as much as $1,000 for each failure, unless due diligence was exercised when the amount was reported on the return. For more information, see Guide RC4419, Financial Institution GST/HST Annual Information Return.

Interest

Interest equal to the basic rate plus 4% will be charged on an overdue amount. The basic rate is based on the rate charged on 90 day Treasury bills, adjusted quarterly, and rounded up to the nearest whole percentage.

Interest is charged on:

  • any overdue balance owing on a return;
  • late or insufficient instalment payments; and
  • any other overdue GST/HST amount that you have to remit to the Receiver General.

To request an interest review or a Statement of Interest online, see My Business Account.

Note
You cannot claim an income tax deduction for arrears interest paid or payable for outstanding GST/HST amounts.

Instalment interest

If the instalment payments you make are equal to ¼ of your net tax from your last fiscal year and you make those payments in full and on time, we will not charge instalment interest, even if your net tax for the year is more than the instalments you made. Interest on the part of any instalment payment that was not paid or that was paid late will be charged at the end of the fiscal year.

Note
If you realize at any time during the fiscal year that you paid less than your required instalment payment or that you did not pay an instalment on time, you can reduce or eliminate your instalment interest by overpaying your next instalment payment or by paying it early.

Instalment interest is calculated beginning the day after the instalment was due and ending on the earlier of the following dates:

  • the day the overdue instalment amount and any accrued interest is paid; and
  • the day your net tax owing for the year is due (although interest still applies if there is an overdue balance on your GST/HST return).

Instalment interest equal to the basic rate plus 4% will be charged on an overdue amount. The basic rate is based on the rate charged on 90 day Treasury bills, adjusted quarterly, and rounded up to the nearest whole percentage.

Examples
Your net tax for the 2010 fiscal year was $4,000. You estimate that your net tax for 2011 will be $3,200. You choose to make quarterly instalments of $800 each based on your estimate and you paid each one by its due date. At the end of 2011 you calculate your net tax and it is actually $5,500. Since your 2011 instalment payments were less than the required amount, you will be charged instalment interest. You have to pay the balance of $2,300 plus instalment interest. If at the end of 2011 your net tax is actually $3,200 then you will not be charged instalment interest.

Your net tax for the 2010 fiscal year was $4,000. You estimate that your net tax for 2011 will be $5,500 You choose to make the required instalment payments of $1000 based on the 2010 year. At the end of 2011 you calculate your net tax is actually $5,500. Since your instalment payments of $1,000 were correct (equal to ¼ of your net tax for 2010), and on time, you will not be charged instalment interest. You have to pay the balance of $1,500 by the due date for your net tax for the fiscal year.

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Date Modified: 2012-01-13

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