Missing your tax filing deadline can cost more than just interest. If you have tax payable, the Canada Revenue Agency (CRA) may charge a late-filing penalty in addition to compound daily interest on any unpaid amount until it is paid in full.

For most taxpayers, the late-filing penalty is 5% of your tax payable on the filing due date, plus 1% of your tax payable for each full month your return is late, up to a maximum of 12 months. If the CRA charged you a late-filing penalty in any of the previous three tax years and issued a formal demand to file, the penalty increases to 10% of your tax payable, plus 2% of your tax payable for each full month the return remains outstanding, up to a maximum of 20 months. The CRA reviews and adjusts its prescribed interest rates every quarter, so the interest you pay may change over time.