Enter the balance you owed at the deadline and how many full months late the return was filed to see the statutory late-filing penalty — 5% plus 1% a month for a first offence, double that for repeat late filers. Formulas reviewed for the 2025 tax year; they apply to T1 and T2 returns alike.
Your late return
How it works. The penalty only exists when there is a balance owing at the deadline. First time, it is 5% of that balance plus 1% for each full month the return is late, to a maximum of 12 months. If CRA demanded the return and you were penalized for late filing in any of the three prior years, the formula doubles: 10% plus 2% a month, up to 20 months. Months beyond the cap add nothing, so the calculator clamps them.
Late-filing penalty
$0
0% of your $0 balance owing
Arrears interest — compounded daily at the prescribed rate, which changes quarterly — is charged on top of this penalty and is not included here.
An estimate is a starting point. Get your real number.
This calculator uses published rates. Your actual position depends on the credits, deductions and structure behind your numbers.
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How the CRA late-filing penalty works
The penalty is a percentage of the balance that was unpaid at the filing deadline, not of your whole tax bill. A first late filing costs 5% of that balance immediately, plus 1% for each full month the return stays unfiled, capped at 12 months — 17% at the worst. The repeat formula is triggered only when both conditions are met: CRA issued a formal demand to file, and you were charged a late-filing penalty in one of the three previous years. Then it is 10% plus 2% a month for up to 20 months — half the balance again at the maximum.
The most important consequence of the formula is that filing on time with nothing paid avoids the penalty entirely, because a return filed by the deadline is not late even if the money is. Interest still runs on the unpaid balance, but interest is a fraction of what the penalty adds. If penalties have already been assessed and the lateness was caused by circumstances beyond your control, CRA's taxpayer relief provisions can cancel or waive them — our CRA representation service prepares those requests. To see the deadline you are measuring against, use the tax deadline calculator.
What this calculator does not cover
Arrears interest, deliberately: it compounds daily at CRA's prescribed rate, and that rate resets every quarter, so any figure printed here would be wrong within months — but it is charged on top of the penalty from the balance-due date until you pay. Also outside this tool: gross-negligence and failure-to-report penalties, instalment interest, provincial penalties where a province assesses its own return, and the separate flat penalties for late information returns such as T4 or T5 slips. If a return is years overdue, the Voluntary Disclosures Program may remove penalties altogether — worth exploring with our CRA representation team before filing.
| Status | Formula | Max |
|---|---|---|
| First time | 5% + 1%/month | 17% at 12 months |
| Repeat | 10% + 2%/month | 50% at 20 months |
Rates reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. Federal and provincial rates change annually, and this tool is an estimate for planning rather than tax advice. Confirm current figures before relying on them for a filing.
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Rates and method reviewed by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. He is Big 4 trained, at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia. In 2014 he founded his accounting practice to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
Sources. CRA — Businesses · Income Tax Act (Justice Laws Website)