Interest and the late-filing penalty

Interest

If you did not pay your 2005 taxes on time or if there is a balance owing for 2005 on your Notice of Assessment, we charge compound daily interest starting May 1, 2006, on any unpaid amounts owing. This includes any balance owing if we reassess your tax return. In addition, we will charge you interest on any penalties, starting the day after your return is due. The rate of interest we charge can change every three months—see prescribed interest rates.

If you have amounts owing from previous years, we will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.

Interest on unpaid taxes may be waived or cancelled under certain circumstances. See Fairness provisions.

Late-filing penalty

If you owe tax for 2005, and do not file your return for 2005 on time, we will charge a late-filing penalty. See Filing due dates.

This penalty is 5% of your 2005 balance owing, plus 1% of your balance owing for each full month that your tax return is late, to a maximum of 12 months. If we charged a late-filing penalty on your tax return for 2002, 2003, or 2004 your late-filing penalty for 2005 will be 10% of your 2005 balance owing, plus 2% of your 2005 balance owing for each full month that your return is late, to a maximum of 20 months.

If you file your tax return late because of circumstances beyond your control, we may waive or cancel the late-filing penalty we have charged you. For more information, see IC92–2, Guidelines for the cancellation and waiver of interest and penalties. Include a letter with your tax return to your tax centre or tax services office (or send one to us separately) giving the reasons why you filed your return late. For more information, see our Fairness provisions program.

You may have to pay a penalty for any amount you fail to report on your tax return for 2005. If you failed to report an amount on your tax return for 2002, 2003, or 2004, you may have to pay another penalty. However, if you tell us about an amount you failed to report, we may waive these penalties. For more information, see our Voluntary Disclosures Program.

Frequently asked questions

I was ill in the hospital last year and was late filing my tax return. I can't go back to work, and I have a tax bill with interest and penalties. I want to make a payment arrangement for the amount owing, but can I have the interest and penalties reduced?

Forms and publications

• General Income Tax and Benefit Guide
• IC92–2, Guidelines for the cancellation and waiver of interest and penalties

Related topics

• Fairness provisions
• Voluntary Disclosures Program