Interest
If you have a balance owing for 2017, the Canada Revenue Agency charges compound daily interest starting May 1, 2018, on any unpaid amounts owing for 2017. This includes any balance owing if we reassess your return. In addition, the CRA will charge you interest on the penalties starting the day after your return is due. The rate of interest the CRA charges can change every three months.
If you have amounts owing from previous years, the CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
Late-filing penalty
If you owe tax for 2017 and do not file your return for 2017 on time, the CRA will charge you a late-filing penalty. The penalty is 5{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of your 2017 balance owing, plus 1{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of your balance owing for each full month your return is late, to a maximum of 12 months.
If the CRA charged a late-filing penalty on your return for 2014, 2015, or 2016 your late-filing penalty for 2017 may be 10{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of your 2017 balance owing, plus 2{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of your 2017 balance owing for each full month your return is late, to a maximum of 20 months.
Tax Tip
Even if you cannot pay your full balance owing on or before April 30, 2018, you can avoid the late-filing penalty by filing your return on time.
Repeated failure to report income penalty
If you failed to report an amount on your return for 2017 and you also failed to report an amount on your return for 2014, 2015, or 2016, you may have to pay a federal and provincial or territorial repeated failure to report income penalty. If you did not report an amount of income of $500 or more for a tax year, it will be considered a failure to report income.
The federal and provincial or territorial penalties are each equal to the lesser of:
- 10{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of the amount you failed to report on your return for 2017; and
- 50{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.
However, if you voluntarily tell the CRA about an amount you failed to report, they may waive these penalties.
Notes
For residents of Quebec, only the federal penalty will be applied as the provincial tax is assessed by Revenu Québec.
For non-residents and deemed residents of Canada, the provincial/territorial penalty will be applied only if provincial/territorial tax is payable.
False statements or omissions penalty
You may have to pay a penalty if you, knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your 2017 return.
The penalty is equal to the greater of:
- $100; and
- 50{cae2521f64dcff784c511b644c6cc8c98f9594c79acdd41ba953a724385391e5} of the understated tax and/or the overstated credits related to the false statement or omission.
However, if you voluntarily tell us about an amount you failed to report and/or credits you overstated, the CRA may waive this penalty.
Cancel or waive penalties or interest
The CRA administers legislation, commonly called the taxpayer relief provisions, that gives the CRA discretion to cancel or waive penalties or interest when taxpayers are unable to meet their tax obligations due to circumstances beyond their control.
The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a request is made.
For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to a penalty for a tax year or fiscal period ending in 2008 or later.
For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2018 must relate to interest that accrued in 2008 or later.
Tax time is just around the corner. If you would like more information on various programs, deductions and credits that can help save you money, contact The Lions Accounting Group Ltd., Chartered Professional Accountants at 604 926 3522.