I'm LATE - What Happens if You Miss the Filing Deadline or You're Late to Pay

As we get closer and closer to April 30th I know this has been on many people's minds. Whether you'll be late filing your 2024 taxes or you haven't filed your taxes in 10 years it can seem scary and overwhelming, mainly because of the unknown. The same goes for those Canadians who won't be able to pay the full amount of their balance owing by April 30th.

Today I'm breaking down what happens in each of these scenarios to take the mystery, and hopefully some of the fear, out of it.

Late Filing

Refund

If you are late filing and you have a refund there are no negative consequences or penalties. You will not receive any social benefits like Canada Child Tax, GST/HST rebates and the Carbon Tax Rebate until you file your return.

In order to get your refund and any social benefits you are owed you must file your tax return. I would suggest still filing your return, even if you have a refund, because you'll get the money owed to you. Wouldn't you rather have your money than give it to CRA?

Balance Owing

If you have a balance owing it's a different story. If you owe money to CRA and you file after the April 30th* filing deadline CRA will give you a late filing penalty of 5% of your balance owing PLUS an additional 1% for each full month that it is late up to 12 months.

Even if you owe money to CRA and you cannot pay your balance owing I recommend you file before April 30th* to avoid the late filing penalty! This penalty can really add up if you continue to procrastinate so it's best to get the tax returns filed ASAP and you can work out a payment plan later.

NOTE: If the CRA charged you a late-filing penalty for 2021, 2022 or 2023 and requested a formal demand for a return, your late-filing penalty for 2024 will be 10% of your balance owing. You will be charged an additional 2% for each full month that you file after the due date, to a maximum of 20 months.

*NOTE: If you are self employed or your common law partner/spouse is self employed you have a filing extension until June 15th. This is only a filing extension and you must still pay your balance owing in full by April 30th to avoid interest.

Late Payments

If you cannot pay all or some of your balance owing by the April 30th payment deadline you have some options.

Set Up a Payment Plan

Although it doesn't seem like it CRA can be flexible with your payments. Once you receive your Notice of Assessment there will be a number to call to set up a payment plan if you're unable to pay the balance in full before April 30th.

You'll want to call the number and let the agent know what you can reasonably and consistently pay each month. There may be some back and forth with the agent to agree upon an amount. Once that is agreed upon and you continue to make your scheduled payments CRA will not continue to bother you.

Taxpayer Relief

If the reason you cannot make the payment to CRA is due to extraordinary circumstances or financial hardship you can apply for tax payer relief. Taxpayer relief does not erase your outstanding balance owing but it waives your penalties and interest.

Extraordinary circumstances include:

• natural or human-made disasters, such as a flood or fire

• civil disturbances or disruptions in services, such as a postal strike

• serious illness or accident

• serious emotional or mental distress, such as death in the immediate family

Financial hardship would occur when paying the interest would make it difficult to provide basic necessities, such as food, medical care, transportation, or shelter for a prolonged period.

There are other cases where the CRA may grant you taxpayer relief outside of these situations.

You can apply online through your CRA My Account by selecting 'Accounts and Payments' and then selecting 'Request relief of penalties and interest'. You can also apply by mail by filling out form RC4288 and then submitting it to CRA for review along with your supporting documents. A board will review your case and either approve or deny your claim. They will send you a letter of determination once they have reached a decision.

You can find more information about tax payer relief HERE.