Essential Link: CRA Interest & Penalties / Relief

General Penalties

This page provides information (including a table of penalties and frequently asked questions) about penalties for late or improperly filed forms and information returns.

Failing to file

The penalty for failing to file a return is $25 per day for up to 100 days (minimum $100 and maximum $2,500). This penalty does apply to Form T1142.

When failing to file is done knowingly or under circumstances amounting to gross negligence, the penalty is $500 per month for up to 24 months (maximum $12,000), less any penalties already levied. This penalty does not apply to Form T1142.

After 24 months, the penalty is 5% of whichever of the following resulted in the requirement to file the information return, less any penalties mentioned above already levied:

• the cost of the foreign property
• the fair market value of the property transferred or loaned to the trust
• the cost of the shares and indebtedness of the foreign affiliate

Note – This penalty does not apply to Form T1142.

The CRA may issue a demand to file a return to a person or partnership under subsection 233(1) of the Income Tax Act. If so, and if the person or partnership knowingly or under circumstances amounting to gross negligence fails to comply with the demand, the penalty is $1,000 per month for up to 24 months (maximum $24,000), less any penalties already levied. This penalty does apply to Form T1142.

False statements or omissions

A penalty applies to people who knowingly or under circumstances amounting to gross negligence make false statements or omissions in an information return.

For Form T1142, the penalty is the greater of either:

• $2,500 or
• 5% of whichever of the following false statement or omission was made about:
  • the fair market value of the distributed property or
  • the indebtedness

For the other information returns, the penalty is the greater of either:

• $24,000 or
• 5% of whichever of the following false statement or omission was made about:
  • the cost of the foreign property
  • the fair market value of the property transferred or loaned to the trust or
  • the cost of the shares and indebtedness of the foreign affiliate

Due diligence exception for penalties

The penalty for omissions on Forms T1134 and T1141 does not apply to taxpayers who make diligent efforts to get the requested information and who:

• disclose in the return the unavailability of the information and
• file the information within 90 days of it later becoming available

Forms and publications

• Form T1134, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates
• Form T1135, Foreign Income Verification Statement
• Form T1141, Information Return in Respect of Transfers or Loans to a Non-Resident Trust
• Form T1142, Information Return in Respect of Distribution from and Indebtedness to a Non-Resident Trust

Related topics

• Questions and answers about penalties (Frequently asked questions)
• Table of penalties

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COVID-19 benefits and your taxes

The Canada Revenue Agency (CRA) is committed to putting people first and providing the income support that Canadians need during the COVID-19 pandemic.

T4A: Report COVID-19 amounts

CERB from CRA, CESB, CRB, CRCB, CRSB, provincial or territorial COVID-19 benefits, issues on T4A slips, report amounts.

T4E: Report COVID-19 amounts

CERB from Service Canada, EI benefit payments, issues with your T4E slip, and how to report amounts.

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Interest relief if you received COVID-19 benefits

On this page

• Eligibility criteria
• Late-filing penalties still apply

Eligibility criteria

Interest relief will be given to individuals who meet all of the following:

• Your total 2020 taxable income was $75,000 or less
• You received at least one COVID-19 benefit in 2020:
  • Canada Emergency Response Benefit (CERB)
  • Canada Emergency Student Benefit (CESB)
  • Canada Recovery Benefit (CRB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Canada Recovery Sickness Benefit (CRSB)
  • Employment Insurance (EI) benefits
  • Provincial or territorial emergency benefits
• You filed your 2020 income tax and benefit return
• You have a balance owing for your 2020 taxes

You meet the above criteria. The CRA will automatically apply interest relief on your 2020 taxes owing until April 30, 2022.

If you meet all eligibility criteria and have filed your 2020 tax return, the CRA will automatically apply interest relief on your 2020 taxes owing.

You will not have to pay interest on any amount owing from your 2020 taxes until April 30, 2022.

Interest relief only applies to your 2020 taxes owing and not on previous or other debts with the CRA.

Late-filing penalties still apply

File your tax return by the due date. If you file late, you will be charged a 5% late-filing penalty on top of what you already owe, plus an additional 1% for each month (up to a maximum of 12 months).

Interest will start after April 30, 2022 on any amount owing for the 2020 tax year.

The CRA can work with you and find flexible options to pay your balance owing. Find ways to pay your 2020 taxes owing.

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Foreign Reporting: Questions and answers about penalties

If someone left Canada and became a non-resident after the enactment of the foreign-reporting rules, what can the CRA do if that person doesn’t file the information returns required under foreign-reporting legislation?

Is each information return that isn’t filed subject to the maximum penalty of 5% of the amount to be reported?

Is the 5% penalty for failing to file Form T1135 levied per year?

How is the cost of foreign property determined for the 5% penalty for failing to file the return for more than 24 months?

If someone left Canada and became a non-resident after the enactment of the foreign-reporting rules, what can the CRA do if that person doesn’t file the information returns required under foreign-reporting legislation?

The foreign-reporting requirements provide for significant penalties for failing to file information returns by the due date. These penalties apply whether or not the person later becomes a non-resident.

If a person becomes liable for these penalties and doesn’t pay the amount owing, we will start our usual collection action.

Is each information return that isn’t filed subject to the maximum penalty of 5% of the amount to be reported?

The penalty for failing to file any of the foreign reporting information returns is the greater of either $100 or $25 per day for each day that the return is late (maximum of $2,500).

When a person fails to file an information return (except for Form T1142) knowingly or under circumstances amounting to gross negligence, the penalty is $500 per month for each month that the return is late (maximum of $12,000), less any penalties already levied.

If the CRA issues a demand for the return, and if the person fails to file the information return knowingly or under circumstances amounting to gross negligence, the penalty is $1,000 per month for each month that the return is late (maximum of $24,000), less any penalties already levied.

If a person, knowingly or under circumstances amounting to gross negligence, is late with a return by more than 24 months, an additional penalty is imposed, less any penalties already levied, of either: 5% of the cost of the property, the cost of the shares, and the indebtedness of the foreign affiliate; or 5% of the fair market value of the property transferred or loaned to the non-resident trust.

If a person who has to file Form T1134 or Form T1141 can show that, despite exercising due diligence, some or all the required information cannot be obtained, the penalties may be waived. If the person obtains the information later, it must be filed no later than 90 days after the person gets the information.

Is the 5% penalty for failing to file Form T1135 levied per year?

The 5% penalty is levied when the failure to file for a year is done knowingly or under circumstances amounting to gross negligence.

For example, if a person fails to file for the 2018 tax year and the failure continues for more than 24 months, the 5% penalty will be levied on the cost amount of foreign property owned in 2018. The 5% penalty is levied only once and is not per year.

If the same person continues to own the foreign property in 2019 and again fails to file the information return for a period of more than 24 months, the 5% penalty will be levied on the cost of the property that should have been reported for the 2019 tax year. The penalty for 2019 is separate from the one in 2018.

If the person owned no foreign property in 2019 for which Form T1135 was required to be filed, there would be no additional penalty.

How is the cost of foreign property determined for the 5% penalty for failing to file the return for more than 24 months?

For purposes of the 5% penalty, the cost of foreign property is the cost amount of the property, as defined in subsection 248(1) of the Income Tax Act.

Forms and publications

• Form T1134 Information Return Relating To Controlled and Not-Controlled Foreign Affiliates
• Form T1135 Foreign Income Verification Statement
• Form T1141 Information Return in Respect of Contributions to Non-Resident Trusts, Arrangements or Entities
  
• Form T1142 Information Return in Respect of Distributions from and Indebtedness to a Non-Resident Trust