Income tax returns – filing and remittance requirements

February 14, 2017

There is a lot of confusion over filing deadlines and penalties. There is a difference between filing deadlines and remittances deadlines, interest on late filed remittances and interest on installments you may have been required to have made.

Filing Date Deadlines Personal (T1)

  • filing and remittance deadlines, except for individuals and their spouses with self employed earnings, is April 30.
  • for individuals and/or with spouses with self employed earnings, the filing deadline is June 15; however, the remittance deadline remains as April 30. If you owe money by April 30 you pay be subject to:
  1. Remittance Interest
  • If monies are owed to CRA as of Apil 30, then CRA will start charging interest at the prescribed interest rate; currently at 3%.
  1. Installment Interest
  • CRA will charge installment interest if all of the following conditions apply:
  1. if you were required to make installment payments in 2016;and
  2. you did not make installment payments, or you made payments that were late or less than the required amount.

CRA calculates the interest on each installment that you should have paid using the payment option that calculates the least amount of interest up to the balance due date. Then CRA calculates the interest on each installment you did pay for the year, starting from the later of the date the payment was made or January 1 up to the balance due date. CRA charges the difference between these two amounts if the difference is more than $25.

Installment interest is calculated at the prescribed interest rate. This rate can change every three months. The current rate is 3%.

Late-filing penalty

If you owe tax for 2016 and do not file your return for 2016 on time, CRA will charge you a late-filing penalty. The penalty is 5% of your balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months.

If CRA charges a late-filing penalty on your return for 2013, 2014, or 2015 your late-filing penalty for 2016 may be 10% of your 2016 balance owing, plus 2% of your 2016 balance owing for each full month that your return is late, to a maximum of 20 months

Installment Penalty

You may have to pay a penalty if your installment payments are late or less than the required amount. CRA applies this penalty only if your installment interest charges for 2016 are more than $1,000.

To calculate the penalty, CRA determines which of the following amounts is higher:

  1. $1,000; or
  2. one-quarter of the installment interest that you would have had to pay if you had not made installment payments for 2016. Then, CRA subtract the higher amount from your actual installment interest charges for 2015. Finally, CRA divides the difference by two and the result is your penalty.