What Happens If I File My Taxes Late?

1. Interest & Penalties

If you owe a balance but file your return, you will be subject to interest fees until your balance due is paid off. If you have a balance owing and you file late, you’ll be subject to interest and a penalty. CRA assesses this extra penalty from the first day your return is late. With a rate of 1% per month (up to 12 months) that your return remains unfiled, this penalty is in addition to amounts charged for interest. If you are consistently late filing, you may be subject to even higher interest rates and penalties – double in fact. Bottom line – even if you cannot pay your balance in full, file on time anyway to avoid extra penalties.

2. Interruption in Benefits

If you receive certain federal or provincial benefit payments, you must file an annual return to keep receiving these payments. Your eligibility for these programs is determined by your reported income, etc. The benefits programs affected include:

• Canada Child Tax Benefit
• Universal Child Care Benefit
• Working Income Tax Benefit
• Guaranteed Income Supplement
• GST/HST Benefit
• Ontario Trillium Benefit

If you file late, these payments may be interrupted. Most of these programs reassess your eligibility in time for payments in July. If your return is filed after the due date, your July payment will be late. How late depends on how long after the due date you return is filed.

3. June 15th for the Self Employed?

If you or your spouse are reporting self-employment income, you do have longer to file. CRA allows small business owners to file an extra 6 weeks after other taxpayers. But there is a catch. If you owe a balance on your return, the balance is due at the normal time – usually April 30^th but this year, due to the fact that April 30^th is a Saturday, the due date is May 2^nd.

Thankfully, with the invention of Netfile, the race to the post office can be avoided by most taxpayers.