What if I can't afford to pay the tax I owe?
Even if you can't afford to pay the income tax that you owe, you should file
your tax return by the annual deadline in order to
avoid any late-filing penalties. The late filing penalty is 5% of the balance
owing, plus 1% of the balance owing for each full month that your return is
late, to a maximum of 12 months (that would be a total penalty of 17% of the
balance owing). If you have incurred late-filing penalties in any of the three
preceding taxation years, your late filing penalties are doubled. For more
information, see CRA's web page
Interest and the late-filing penalty.
After you file your tax return, you will be sent an assessment notice from
Canada Revenue Agency (CRA) which shows the balance of tax owing. After the
payment deadline, interest will accrue on this balance at the CRA prescribed
rate of interest, compounded daily. The current interest rates can be found on
the CRA
prescribed interest rates page. You can communicate with CRA to set up a
payment schedule for the taxes owing.