Notice of Assessment

If the CRA assesses your return and has determined that you owe taxes, you will be changed compound daily interest. Interest charges will begin on May 1 in the year following the last tax year (the day after the April 30 filing deadline). If you have a balance owing for 2019, the CRA charges compound daily interest starting May 1, 2020, on any unpaid amounts owing for 2019. This includes any balance owing if the CRA reassesses your return. In addition, the CRA will charge you interest on the penalties starting the day after your filing due date. The rate of interest the CRA charges can change every 3 months at the prescribed interest rate, which is currently 6%. This applies to overdue taxes, Canada Pension Plan contributions, and employment insurance premiums.

You may have to pay a penalty if your installment payments are late or less than the required amount. We apply this penalty only if your installment interest charges for 2020 are more than $1,000. To calculate the penalty, we determine which of the following amounts is higher: $1,000 or 25% of the instalment interest that you would have had to pay if you had not made instalment payments for 2020. The CRA will then subtract the higher amount from your actual installment interest charges for 2020. Finally, we divide the difference by two and the result is your penalty.

If you earn income that has no tax withheld or does not have enough tax withheld for more than one year, you may have to pay tax by installments. This can happen if you earn rental, investment, or self-employment income, certain pension payments, or income from more than one job. If you received an installment reminder from the CRA and you have a net tax owing above the threshold limit—more than $3000 if you live in Ontario (or any other province other than Quebec, you will be required to pay by installments.

The CRA will charge you a late-filing penalty of 5% for the balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

If you have failed to report income for multiple years in an amount exceeding $500 for a tax year, then you will have to pay a repeated failure-to-report income penalty. The federal and provincial or territorial penalties are equal to the lesser of:

• 10% of the amount you failed to report on your return
• 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report

If you owe tax for 2019 and you file your return for 2019 after the due date, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2019 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

If the CRA charged a late-filing penalty on your return for 2016, 2017, or 2018, your late-filing penalty for 2019 will be 10% of your 2019 balance owing. In addition, you will be charged 2% of your 2019 balance for each full month your return is late, to a maximum of 20 months.

You may have to pay a penalty if you, knowingly or negligently, made a false statement or omission on your return. The penalty is equal to the greater of

• $100
• 50% of the understated tax and/or the overstated credits related to the false statement or omission

Yes, you can file an application for relief from interest and penalties through the Voluntary Disclosure Program. The Voluntary Tax Disclosure Program is a tax amnesty program that provides the taxpayer with the opportunity to avoid tax penalties, interest, and prosecution by voluntarily disclosing inaccurate or incomplete information, or disclose information not previously reported in their income tax filings. Eligibility for the Voluntary Disclosure Program includes unreported income, unfiled tax returns, disclosures for excise taxes, income tax filings, source deductions, duties under various statutes and GST/HST filings.