This guide explains the CRA late-filing penalty, how interest adds to it, and a worked example of what a late return really costs.

The short answer

If you file your return after the deadline and owe tax, the CRA charges a penalty of 5% of the balance owing, plus 1% for each full month the return is late, up to 12 months. If you owe nothing, there is no late-filing penalty. Interest on the unpaid tax starts the day after the due date, compounds daily and is charged whether you filed on time or not.

The penalty comes from section 162 of the Income Tax Act, and the CRA explains it here. Repeat late filers can face a higher rate, covered below.

When your 2025 return counts as late

For most people, the 2025 return had to be filed by April 30, 2026, and any balance owing had to be paid by the same date. If you or your spouse or common-law partner were self-employed, the filing deadline was June 15, 2026, but the payment deadline was still April 30, 2026, according to the CRA filing dates page.

When a deadline falls on a Saturday, Sunday or a public holiday the CRA recognizes, your return is on time if the CRA receives it, or it is postmarked, by the next business day.

How the late-filing penalty is calculated

The penalty is a percentage of the tax that was still unpaid when your return was due. Three details matter:

• Only full months count. A return filed one day late or 29 days late gets the same 5%. The extra 1% is added for each complete month after the deadline.
• It stops growing at 12 months. The regular penalty tops out at 5% plus 12%, or 17% of the balance owing.
• The base is unpaid tax at the deadline. If you paid your balance in full by April 30 but filed later, the amount unpaid at the deadline was zero, so the penalty is zero.

The repeat penalty

The penalty doubles if all three of these apply: you file late again, the CRA sent you a demand to file for that year, and you were already charged a late-filing penalty for any of the 3 previous years. In that case it is 10% of the balance owing plus 2% for each full month late, up to 20 months. That can reach 50% of what you owe.

Hypothetical $2,000 balance owing. Rates from Income Tax Act sections 162(1) and 162(2). Penalty only, before interest.

Interest is charged on top

Interest is separate from the penalty. If you owe tax for 2025, the CRA charges compound daily interest starting the day after the due date, on any unpaid amount. The rate can change every three months. The CRA prescribed rate for overdue taxes is 7% from October 1 to December 31, 2026. It was also 7% for the April to June and July to September 2026 quarters.

The penalty itself also earns interest. Under section 161(11) of the Income Tax Act, interest on a late-filing penalty runs from the day the return was due until the day you pay it.

A worked example: $2,000 owing, filed November 2

Say you owed $2,000 on your 2025 return, which was due April 30, 2026. You file and pay everything on November 2, 2026. That is 186 days after the due date and 6 full months late.

Hypothetical example. Interest at 7% a year compounded daily (7% divided by 365 per day) for 186 days on both the tax and the penalty. The CRA’s own calculation is final.

Filing on time, even without paying, would have saved $228 in this example. The interest is the same either way. The penalty, and the interest on it, only happens because the return itself was late.

Filing late with a refund or no income

If the CRA owes you money, or you owe nothing, there is no late-filing penalty because there is no unpaid tax to apply it to. That does not make late filing free. The CRA says filing late can delay your benefit and credit payments, including the GST/HST credit, the Canada child benefit and Old Age Security.

If you missed a past year, file it as soon as you can so your federal benefit payments are not held up any longer.

Can the CRA cancel the penalty?

The CRA may cancel or waive penalties and interest through taxpayer relief when events beyond your control stopped you from meeting your tax obligations. It considers three kinds of situations:

• Extraordinary circumstances, such as a flood or fire, a postal strike, a serious illness or accident, or serious emotional or mental distress like a death in the immediate family.
• Actions of the CRA, such as errors in its materials, incorrect information it gave you, or processing errors.
• Inability to pay, where the CRA may cancel interest, in whole or in part, so you can pay the debt.

Requests must relate to a tax year ending in any of the 10 calendar years before the year you apply. Individuals can apply in My Account under “Accounts and payments,” or by mail with Form RC4288. The CRA lists the current average processing time as about 16 months, so do not wait on relief before paying.

What to do if you missed the deadline

1. File as soon as you can. Each full month adds 1% of the balance owing, until 12 months have passed.
2. Pay as much as you can now. Interest compounds daily on what remains, at 7% for the last quarter of 2026.
3. Check the penalty. When the CRA assesses your return, compare any late-filing penalty with the table above.
4. Set up a payment arrangement if you cannot pay in full. The CRA lets you schedule a series of pre-authorized debit payments in My Account, or call its TeleArrangement service.
5. Apply for relief if illness, a disaster, a CRA error or hardship caused the delay. Keep records that show what happened and when.

Frequently asked questions

• Sources, checked November 2, 2026: CRA: Interest and penalties on late taxes (modified 2026-01-20); CRA: Filing due dates for the 2025 tax return (modified 2026-01-20); CRA: Prescribed interest rates, fourth quarter 2026 (modified 2026-08-28), with the second and third quarter 2026 pages; CRA: Cancel or waive penalties and interest (modified 2026-09-25); CRA: Payment arrangements (modified 2026-10-27); Income Tax Act, section 162 and section 161, current to 2026-09-21.
• Method: Penalties use the rates in sections 162(1) and 162(2). Interest was calculated in Python as $2,000 and the $220 penalty growing at 7% divided by 365 per day for 186 days (May 1 to November 2, 2026), then re-checked with a day-by-day loop. As a sanity check, simple interest on the $2,000 would be $71.34. Figures are estimates; the CRA’s own calculation is final.

Important: This guide is general information, not tax, legal or financial advice. It covers the federal late-filing penalty for individuals. For your own situation, check your CRA My Account or speak with a qualified tax professional. Gizly is not paid by anyone mentioned here. See our affiliate disclosure.