Interest
If you did not pay your 2006 taxes on time or if there is a balance owing for 2006 on your Notice of Assessment, we charge compound daily interest starting May 1, 2007, on any unpaid amounts owing for 2006. This includes any balance owing if we reassess your return. In addition, we will charge you interest on any penalties, starting the day after your return is due. The rate of interest we charge can change every three months—see prescribed interest rates.
If you have amounts owing from previous years, we will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
Interest on unpaid taxes may be waived or cancelled under certain circumstances. See Taxpayer relief provisions.
Late-filing penalty
If you owe tax for 2006, and do not file your return for 2006 on time, we will charge a late-filing penalty. See Filing due dates.
The penalty is 5% of your 2006 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. If we charged a late-filing penalty on your return for 2003, 2004, or 2005 your late-filing penalty for 2006 will be 10% of your 2006 balance owing, plus 2% of your 2006 balance owing for each full month that your return is late, to a maximum of 20 months.
If you file your return late because of circumstances beyond your control, we may waive or cancel the late-filing penalty we have charged you. For more information, see IC07-1, Taxpayer Relief Provisions. Include a letter with your tax return to your tax centre or tax services office (or send one to us separately) giving the reasons why you filed your return late. Only requests relating to tax years ending in any of the 10 calendar years before the year you make the request will be considered. For example, a request made in 2007 must relate to the 1997 or a subsequent tax year to be considered. For more information, see our Taxpayer relief provisions program.
You may have to pay a penalty for any amount you fail to report on your return for 2006. If you failed to report an amount on your return for 2003, 2004, or 2005, you may have to pay another penalty. However, if you tell us about an amount you failed to report, we may waive these penalties. For more information, see our Voluntary Disclosures Program.
Frequently asked questions
I was ill in the hospital last year and was late filing my tax return. I can't go back to work, and I have a tax bill with interest and penalties. I want to make a payment arrangement for the amount owing, but can I have the interest and penalties reduced?
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