Interest and penalties

Interest

If you have a balance owing for 2013, we charge compound daily interest starting May 1, 2014, on any unpaid amounts owing for 2013. This includes any balance owing if we reassess your return. In addition, we will charge you interest on the penalties starting the day after your return is due. The rate of interest we charge can change every three months. See Prescribed interest rates.

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

Interest on unpaid taxes may be waived or cancelled under certain circumstances. See Taxpayer relief provisions.

Late-filing penalty

If you owe tax for 2013 and do not file your return for 2013 on time, we will charge you a late-filing penalty. The penalty is 5% of your 2013 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

If we charged a late-filing penalty on your return for 2010, 2011, or 2012 your late-filing penalty for 2013 may be 10% of your 2013 balance owing, plus 2% of your 2013 balance owing for each full month your return is late, to a maximum of 20 months.

Tax tip

Even if you cannot pay the full amount of your balance owing on or before April 30, 2014, you can avoid the late-filing penalty by filing your return on time.

We may waive or cancel this penalty as well as any interest that may apply if you file your return late because of circumstances beyond your control. If this happens, complete Form RC4288, Request for Taxpayer Relief, and mail it to the intake centre responsible for your province or territory of residence.

For a penalty, only requests relating to tax years ending in any of the 10 calendar years before the year in which you make the request will be considered. For example, a request made in 2014 must relate to a penalty for the 2004 or a later tax year.

For interest on a balance owing or on a penalty for any tax year, the amounts that accrued during the 10 calendar years before the year in which you make the request will be considered. For example, a request made in 2014 must relate to interest that accrued in 2004 or a later calendar year.

For more information, go to Taxpayer relief provisions, or see Information Circular IC07-1, Taxpayer Relief Provisions.

Repeated failure to report income penalty

If you failed to report an amount on your return for 2013, and you also failed to report an amount on your return for 2010, 2011, or 2012, you may have to pay a federal and provincial/territorial repeated failure to report income penalty. The federal and provincial/territorial penalties are each 10% of the amount that you failed to report on your return for 2013.

However, if you voluntarily tell us about an amount you failed to report, we may waive these penalties. For more information, see Voluntary Disclosures Program.

Notes

For residents of Quebec, only the federal penalty will be applied as the provincial tax is assessed by Revenu Québec.

For non-residents and deemed residents of Canada, the provincial/territorial penalty will be applied only if provincial/territorial tax is payable.

Example

Denis has been a resident of Manitoba since 2008. At the time he filed his 2010 return he forgot to report $850 of interest income he received that year. In 2011, CRA reassessed his return to include the unreported income. When Denis filed his 2012 tax return in 2013, he failed to report $1,500 of employment income he earned. Later that year when CRA reassessed his 2012 return to include the unreported employment income, Denis was charged a $300 penalty ($150 federal + $150 provincial) for repeated failure to report income. The penalty was charged because Denis failed to report on his 2012 return income that was required to be reported and one of his tax returns for the three previous years was reassessed for the same reason.

False statements or omissions penalty

You may have to pay a penalty if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your 2013 return.

The penalty is equal to the greater of:

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

However, if you voluntarily tell us about an amount you failed to report and/or credits you overstated, we may waive this penalty. For more information, see Voluntary Disclosures Program.

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