Filing your taxes late in Canada can lead to several financial penalties and interest charges. Here's a detailed look at what happens if you miss the tax filing deadline:

Late-Filing Penalties

If you file your tax return after the due date and have a balance owing, the Canada Revenue Agency (CRA) will impose a late-filing penalty. The standard penalty is 5% of your 2023 balance owing, plus an additional 1% for each full month that you file after the due date, up to a maximum of 12 months. If you have been penalized for late filing in any of the three previous years and have received a formal demand for a return, the penalty increases to 10% of your balance owing, with an additional 2% per month, up to a maximum of 20 months.

Interest on Unpaid Taxes

In addition to penalties, the CRA charges compound daily interest on any unpaid taxes starting from the day after the taxes were due. The interest rate can change every three months, based on prescribed rates.

Impact on Benefits and Credits

Filing late can also delay your benefit and credit payments, such as the Canada Child Benefit or the GST/HST credit. These payments may be paused until you file your return.

Options for Relief

If you are unable to meet your tax obligations due to circumstances beyond your control, you can request the CRA to cancel or waive penalties or interest. The CRA can grant relief within 10 years of your request date.

Recommendations

To avoid these penalties and interest charges, it's advisable to file your taxes on time, even if you cannot pay the full amount you owe. The CRA often offers payment arrangements to help manage tax debts. For the most accurate and detailed information, visiting the official CRA website or consulting directly with the CRA is recommended.