Simon Says: Avoid Penalties and Interest
Don’t Miss Your Tax Deadlines: Penalties and Interest for Corporations and Individuals in Canada
Disclosure: This blog covers federal tax rules only (as administered by the Canada Revenue Agency). Provincial or territorial penalties and deadlines may differ.
Staying compliant with tax deadlines is more than good practice—it can save you thousands of dollars in penalties and interest. Whether you run a Canadian-Controlled Private Corporation (CCPC) or file as an individual, the Canada Revenue Agency (CRA) has strict rules around when returns and payments are due. Below, we break down the key deadlines and what happens if you’re late.
1. Payroll Source Deductions (Employers / CCPCs)
What’s due? Employers must withhold Canada Pension Plan (CPP), Employment Insurance (EI), and income tax from employees’ paycheques and remit them—along with the employer’s share—to the CRA.
Deadlines
· Most small employers remit monthly (15th of the following month).
· Larger employers may remit more frequently (bi-weekly or accelerated schedules).
Penalties for Late Remittances
1–3 days late: 3% of amount due
4–5 days late: 5%
6–7 days late: 7%
More than 7 days late: 10%
Repeated/gross negligence: up to 20%
Interest
Daily compounded interest applies from the due date until payment is received.
Late Payroll Returns (e.g., T4 slips)
Failure to file T4 slips by the last day of February can result in penalties ranging from $100 to $7,500 depending on how many slips are late.
2. Corporate Income Tax (CCPCs)
What’s due? Corporations file a T2 return and pay corporate income tax.
Deadlines
T2 return: within 6 months of year-end
Balance of taxes owing: usually due 2 or 3 months after year-end, depending on CCPC eligibility
Instalments: required monthly or quarterly if taxes owing exceed $3,000 in either of the two prior years
Penalties for Late Filing
First time: 5% of unpaid tax + 1% per month (up to 12 months)
Repeat late filing: 10% + 2% per month (up to 20 months)
Interest
Daily compounded interest applies to unpaid balances and late/insufficient instalments.
Interest rates fluctuate quarterly (for example, 7% in Q4 2025).
Instalment Penalty
If instalment interest exceeds $1,000, additional penalties apply.
3. GST/HST (Corporations / Sole Proprietors)
What’s due? GST/HST returns must be filed even if no tax is owing. Payment is due at the same time.
Deadlines
Monthly, quarterly, or annual depending on CRA reporting frequency.
Annual filers: due 3 months after year-end (individuals with business income often align with their June 15 personal deadline).
Penalties for Late Filing with Amount Owing Penalty formula:
1% of balance owing + (25% of that 1% × number of months late, up to 12 months).
Incorrect Reporting Penalty
5% of understated amount + 1% per month until corrected (max 10%).
Interest
Daily compounded interest applies from the due date until full payment. Rates change each quarter.
4. Individual Tax Returns
What’s due? All residents must file a T1 return.
Deadlines
Standard filing: April 30 of the following year
Self-employed (and spouse): June 15 (but any balance owing is still due April 30)
Instalments: quarterly (March, June, September, December) if required
Penalties for Late Filing
5% of balance owing + 1% per month (max 12 months)
Repeat late filing: 10% + 2% per month (max 20 months)
Interest
Daily compounded interest applies to balances owing and missed instalments. CRA rates fluctuate quarterly.
Why Deadlines Matter
The CRA’s penalties are designed to add up quickly. A few days late on payroll can trigger a 10% penalty, while missing corporate or personal filing deadlines can lead to thousands in charges and long-term consequences.
Pro tip: Even if you cannot pay your balance in full, always file your return on time. Filing on time avoids the late-filing penalty, and you’ll only pay interest on what’s outstanding.
Key Filing & Payment Deadlines at a Glance
Individuals
T1 Personal Tax Return April 30 (following year)
T1 Self-Employed Return (and spouse/partner) June 15 (following year) — balance still due April 30
Balance of Tax Owing (all individuals) April 30
Instalment Payments March 15, June 15, September 15, December 15
CCPCs
Payroll Remittances 15th of following month (monthly remitters) / more frequent if large employer
T4 Slips & Summary Last day of February (following calendar year)
T2 Corporate Tax
Return 6 months after year-end
Corporate Balance Due 2 months after year-end (3 months if CCPC meets conditions)
Corporate Instalments Monthly or quarterly, depending on CRA requirements
GST/HST Filing Monthly/quarterly/annual as assigned by CRA
GST/HST Payment Generally 1 month after the reporting period
Final Thoughts
Staying compliant with payroll, corporate, GST/HST, and personal tax deadlines is essential to avoid unnecessary costs. If you’re unsure about your obligations—or you’ve already missed a deadline—speaking with a Canadian CPA can help minimize the damage and keep you onside with the CRA.
Reference: CRA Prescribed Interest Rates (updated quarterly): Canada.ca – Prescribed interest rates
