CRA late-filing penalties and interest
Updated October 12, 2026
The short answer
For a late T1 or T2 with a balance owing, the penalty is 5% of the balance plus 1% for each full month late, up to 12 months. GST/HST is 1% plus 0.25% a month, and late payroll remittances cost 3% to 10%. Interest is charged on top, compounded daily, and the CRA can cancel penalties and interest in some circumstances.
| T1 / T2 late filing | 5% of the balance owing + 1% per full month, up to 12 months |
|---|---|
| T1 / T2 repeat late filer (within 3 years) | 10% + 2% per full month, up to 20 months |
| GST/HST late filing | 1% of net tax owing + 0.25% of that per full month, up to 12 months |
| Payroll remittance | 3% (1 to 3 days late), 5% (4 to 5), 7% (6 to 7), 10% (more than 7 or unpaid) |
| Interest | Prescribed rate, compounded daily, on unpaid balances and penalties |
Interest is separate from penalties
Penalties are one-time charges tied to lateness. Interest runs every day a balance is unpaid, even when a return was filed on time, which is why paying by the payment deadline matters as much as filing by the filing deadline.
Asking for relief
The CRA's taxpayer relief provisions allow it to cancel or waive penalties and interest in situations such as illness, disasters, or CRA error. Relief is discretionary and has to be requested, with supporting facts, so keep a record of what happened and when.
Avoiding repeat-offender rates
The higher repeat rates apply when a penalty was already charged in any of the previous three years, which is another reason a firm-wide deadline calendar pays for itself. This guide summarizes federal rules published by the Canada Revenue Agency. Your situation may differ (a fiscal year that doesn't end December 31, a non-resident, a province with its own return), so confirm at canada.ca or with your accountant before relying on a date.
Frequently asked questions
Does the CRA charge interest on penalties?+
Yes. Interest is charged on unpaid balances and on penalties, compounded daily at the prescribed rate.
Can late-filing penalties be cancelled?+
Sometimes. Under the taxpayer relief provisions the CRA can cancel or reduce penalties and interest where circumstances beyond the taxpayer's control caused the delay. It must be requested.
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