Penalties for Late Tax Remittances in Canada
In Canada, timely tax remittance is crucial for businesses and self-employed individuals. The Canada Revenue Agency (CRA) imposes penalties for late tax remittances to ensure compliance and deter delays.The CRA charges interest on any outstanding tax amounts. Interest is compounded daily and can quickly accumulate if payments are not made promptly.
Late Filing Penalties:
- Corporations: For corporate tax returns, if you fail to file your return by the due date, you may face a penalty of 5% of the unpaid tax plus 1% for each month the return is late, up to a maximum of 12 months.
- Individuals and Partnerships: If you miss the filing deadline, you may be penalized with a fixed amount plus additional penalties based on the number of days overdue.
⚠️ Penalty Percentage
- 3% if the remittance is 1-3 days late
- 5% if it is 4-5 days late
- 7% if it is 6-7 days late
- 10% for more than 7 days late, or if it never paid.
- 20% for repeat failures* and violations.
*Repeated Failures: The CRA may impose higher penalties for subsequent offenses if you've been penalized for late payments before. For instance, if you were late in two of the last three years, you could incur a more substantial penalty—10% of the unpaid tax plus 2% for each additional month the payment is overdue.
Suspected intentional misreporting and/or tax evasion and/or Persistent non-compliance can lead to additional legal actions and penalties
Source:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/remitting-source-deductions/how-when-remit-due-dates.html#h_2
https://www.canada.ca/en/revenue-agency/services/payments-cra/interest-penalties-late-incorrect-payments.html#toc2