Late Filing Penalties: Talk About It!

Geoff Currier

While most T1 returns are in the hands of the Canada Revenue Agency (CRA) by April 30, we know many are not. In fact, millions of returns were still outstanding as of mid-May. Late-filing clients they need to know about the consequences, especially if they owe. Here’s a rundown to be aware of:

Backdrop: Until taxpayers file, CRA doesn’t get paid and neither do you. If they are due a refund, they are losing the interest they could be collecting on the money by not filing on time.

Based on the best available figures from the CRA and StatsCan, we can conclude that as many as two million Canadians have yet to file their 2025 returns.

The Penalties: The CRA doesn’t fool around. First time offenders are hit with a 5% penalty of the balance owing plus 1% per full month the return is late up to 12 months. For repeat offenders the penalty shoots up to 10% of the balance owing and 2% per month up to 20 months. If you haven’t made a practice of informing your clients about these penalties, it might be suggested that you do in future. 

June Tax Deadlines: There are a few deadlines to watch for in June. June 2 is the date for late filing relief for T1 filers with Capital Gains.

The 16th is the date for individuals to make an election or revocation to stop contributing to CPP or to revoke a prior election.

It is also an important date for your snowbird clients. The 16th is the Closer Connection Exception Statement for Aliens (IRS Form  8840): and the file extension to file U.S. tax returns (IRS Form 4868) 

June 30th is an important date as well. This is the date for reporting excess TFSA amounts. (Form RC243 TFSA Return and RC243-Schedule A)

It is also the deadline for filing net rental income from Canadian-source rental income. (Sections 216 and 217)

Finally, the 30th is the date for filing a return for those who died between Dec.1 and Dec.31, 2025. This is one of the reasons it’s important to ask your clients about any major changes in their lives in the previous year. If they have lost a loved one and you don’t know about it, you can’t inform them of deadlines such as this one. 

The Bottom Line: The most intense period of your year may be over but staying on top of your late-filing clients as well as those who have deadlines coming up in June is all a part of the job. Communicating effectively will help you retain those clients for years to come.

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