Late Filing of a Tax Return / Late Filing Penalties and Interest
If your return is late and there is a balance owing, you will be subject to interest and late-filing penalties. Interest is charged on the outstanding balance starting the day after the due date of the taxes payable, and is compounded daily.
Interest rates are subject to change quarterly. For current rates, see the Canada Revenue Agency (CRA) web page which provides prescribed interest rates.
The late filing penalty is 5% of the outstanding balance, plus 1% of the outstanding balance for every month that your return is late, to a maximum of 12 months (that would be a total penalty of 17% of the balance owing).
Interest is also charged on penalties. If you were charged late-filing penalties for any of the 3 preceding tax years, your late filing penalties are doubled. For more information, see CRA's web page Interest and the late-filing penalty.
For dates and hours of NetFile and EFile availability, see our article on Tax Filing Methods. Some late returns can still be filed this way.
Late returns can always be filed by sending a printed or manually prepared return to CRA. Forms are available from the CRA General Income Tax and Benefit Package web page.
Telefile is no longer available for filing tax returns.
For information on time limits for late returns and circumstances under which the interest and penalties may be waived, see the article on taxpayer relief (fairness) provisions.
Sometimes an election is required to be filed with an income tax return. When a request is made to late-file an election, a penalty can be imposed @ $100 per month x the number of months that the election is late, to a maximum of $8,000. This also applies to the designation of a principal residence in order to claim the Principal Residence Exemption when your home has been sold. The sale of your home must be reported on your personal income tax return - this is a new CRA administrative policy effective for the 2016 and later taxation years. If you are late in reporting, you will be subject to penalties!
Canada Revenue Agency Resources
Revised: July 23, 2017
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Income tax returns e-filing: Last day today, rush to file returns
(Courtesy: Income Tax Dept)
The delay in the deadline for e-filing of income tax returns (ITR) by a week brought respite to taxpayers who were struggling to get the job done by on August 31, which was the last day, due to technical anomalies. This forced the Central Board of Direct Taxes (CBDT) to extend the deadline to September 7, which is today. In case you have been tardy, do rush and file your income tax returns. Here is a 10-point check list tax payers must be aware of, and adhere to, while filing returns:
1. If you miss the deadline today, you will not be allowed to file a reviewed return. If returns are filed within the due date, any loss is allowed to be carried forward for eight years against incomes of the future years, subject to certain conditions. This helps to condense tax liability for the future years. If returns are not filed within the due date, then 1% penal interest will be charged.
2. Delayed filing means delayed refunds. According to the Income Tax Act, one can’t carry forward the loss if income tax returns have not been filed on time.
3.If the taxpayer files return after the due date, he may have to pay interest and penalty. If no tax liability is due but the income tax returns has not been filed within the stipulated time, no penalty will be levied provided the return is filed within the same assessment year.
4.Taxpayers also lose out on interest on refund if the return is not filed on time. The tax department pays interest for the period beginning the date of filing up to the date of issue of refund.
5.Taxpayer can’t revise a later return and will have to pay interest if tax liability is due. The late returns are filed under Section 139(4) of the I-T Act.
6. Assessees can file the return within one year from the end of assessment year. This means that for FY 2014-15, the return can be filed till March 31, 2017.
7. If someone filed the return, but overlooked revealing some information, he or she may be able to revise only where they filed the return within due date.
8.In the event of non-filing of the return, taxpayers may also suffer when seeking a loan or applying for visas in certain countries.
9.Those still scrambling to meet the deadline for various reasons including lack of all information, will get one year from the end of assessment year to file their returns, though along with interest or penalty, as the case may be.
10.By not filing return on time they may lose out on various benefits including carrying forward of losses incurred during the financial year for which the assessment is being made. However, If any error is found in the return filed for assessment year 2014-15, these can be revised only up to March 31, 2016. It is advisable to take the help of a chartered accountant or tax return preparer to file late returns.