Falling behind on tax returns is more common than people think, and it's usually fixable. The sooner you catch up, the less it costs.
If you're owed money or owe nothing
There's no late-filing penalty when you don't owe tax. But not filing can stop benefits and credits you're entitled to, such as the Canada child benefit, and refunds simply wait until you file.
If you owe tax
- The late-filing penalty is 5% of the balance owing, plus 1% for each full month late, up to 12 months.
- If you were charged a late-filing penalty in any of the three previous years and CRA sent a formal demand, the penalty can double: 10% plus 2% a month, up to 20 months.
- Interest also runs on unpaid balances.
File on time even if you can't pay in full. Filing stops the penalty from growing, and CRA can arrange a payment plan for the balance.
If income was left off past returns
CRA's Voluntary Disclosures Program can reduce penalties and some interest if you come forward before CRA contacts you about it. Speak to a professional before you apply.
How to catch up
- Gather what you have. Once you authorize a representative, most slips can be downloaded from CRA.
- File the most recent years first if benefits are at stake, then work back.
- Set up instalments or a payment plan for any balance, so you don't fall behind again.