CRA & Revenu Québec

Filing Late and Requesting Relief from Penalties

The Canada Revenue Agency requires that taxpayers file their tax returns on time. In most cases, extensions for late filing are not offered. However, there are a few exceptions to the rule. If you have filed late or failed to file correctly in previous years, there are ways to apply for relief from penalties and interest.

Filing Your Return Late

If you file your income tax return late and owe tax, the CRA will charge interest and penalties. The penalties are equal to five percent of the balance owed plus and an additional percent for each month you are late. Interest is a compounded daily interest with a rate that changes every three months.

If you owe tax but do not have enough money to pay, the CRA still urges you to file on time. Once you file, you can create a payment plan with the agency. Although you still have to pay your tax and any interest that accrues, you will avoid the late filing penalty, which can save you money.

If you do not owe any tax, the CRA will not charge you interest or a late filing penalty, regardless of when you file. However, it is still not advantageous to file late, as it can delay payments from certain benefits programs.

Requesting to Waive Penalties or Interest

If you have to file late or if you have already filed late in a previous years, you can request to have both your interest and penalties waived. To do so, complete Form RC4288 and submit it to the CRA. Unfortunately, you can only use this form for one of the previous ten tax years.

When filling out the form, note the year to which you are referring. You must also select if you want penalties, interest, or both penalties and interest waived. Then, you have to explain to the CRA why your return was late.

To qualify, the situation must be out of your control. You can write your own reason, but the CRA also includes several options such as CRA error or delay, medical emergency, mental distress, natural disaster and others.

Special Situations

In some cases, the CRA reminds taxpayers to apply for late filing relief. For example, after wild fires hit British Columbia in 2015, Minister Findlay reminded people affected by the fires to file Form RC4288. Unfortunately, you cannot automatically qualify for the waiver.

The Voluntary Disclosures Program

If you have failed to file or forgot to report information in a previous tax year, you may want to take advantage of the CRA’s Voluntary Disclosures Program. Through this program, you can notify the CRA of any unreported income or mistakes on a return from a previous year. For the VDP, there is no limit to how far back you may go.

To participate in the program, complete Form RC199 and submit it to the CRA. Any tax that you owe is due immediately, and you have to pay interest on these balances. However, you do not have to worry about penalties.