Behind on taxes? See what the late-filing penalty and daily interest add up to, what waiting costs, and how to stop the meter.
Waiting a year adds about $1,971. Filing stops the late-filing penalty even if you can't pay yet.
Estimates for planning, not tax advice or an official balance. Assumes a December 31 year end. CRA interest compounds daily at the prescribed rate, updated quarterly.
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Two things grow while a return sits unfiled: the late-filing penalty, and daily compound interest on everything.
| Charge | How it's calculated | Maximum |
|---|---|---|
| Late-filing penalty (T1/T2) | 5% of the balance owing + 1% per full month late | 17% at 12 months |
| Repeat late filer | 10% + 2% per month (after a demand + prior penalty) | 50% at 20 months |
| Late GST/HST return | 1% of the balance + 0.25% per full month late | 4% at 12 months |
| Arrears interest | Prescribed rate (7% in Q3 2026), compounded daily on tax and penalties | No cap, never stops |
The one move that always helps: file now, even if you can't pay. Filing stops the biggest penalty immediately; only the much smaller interest keeps running.
Five quick questions. You'll get your late-tax numbers, the CRA relief programs that may erase the penalties, and a step-by-step catch-up plan.
0 of 5 answered. Your personalized report unlocks after the last question.
If CRA hasn't contacted you yet, the Voluntary Disclosures Program can cancel some or all penalties when you come forward first. And the application generally has to go in before you file the late returns, so the order of operations matters.
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For income tax (T1 and T2), the penalty is 5% of your balance owing, plus 1% for each full month the return is late, up to 12 months. If CRA demanded a return and you were also charged a late-filing penalty in any of the 3 previous years, it doubles: 10% plus 2% per month, up to 20 months. The calculator above applies both rules.
CRA charges arrears interest at its prescribed rate, which is set every quarter (7% for July to September 2026). Interest compounds daily on your unpaid tax and on the penalties, which is why the total keeps growing even after the late-filing penalty maxes out.
Yes. The late-filing penalty stops the moment you file, and it's the biggest chunk of the bill. Interest keeps running on what you owe, but filing without paying still cuts your costs sharply, and CRA offers payment arrangements once your return is in.
Sometimes, yes. If CRA hasn't contacted you about the unfiled returns yet, the Voluntary Disclosures Program (VDP) can cancel some or all penalties, and part of the interest, when you come forward first. There's also taxpayer relief (form RC4288) for situations like illness or disaster. Timing matters: a VDP application generally has to arrive before you file the late returns.
With no balance owing there's no late-filing penalty. But CRA holds your refund, and benefit payments that depend on your return (like the GST/HST credit), until you file. Enter a $0 balance in the calculator to see this case.
Yes. A late GST/HST return with a balance owing is charged 1% of the amount owing plus 0.25% for each full month late (up to 12 months), and arrears interest compounds daily on top. Pick “GST/HST return” in the calculator. The estimate assumes an annual filer with a December 31 year end.
You can file returns going back many years, and CRA generally lets individuals request refunds and adjustments up to 10 years back. The calculator covers tax years 2021 onward; if you're further behind than that, it's worth talking to a CPA about the right order to catch up in. You can book a CPA consultation through ReInvestWealth.
Free, no sign-up. It applies the actual CRA formulas with the prescribed interest rate for each quarter (rates verified 2026-07-26). It's still an estimate for planning: your assessed balance depends on the return itself, payment dates, and any relief CRA grants.
ReInvestWealth rebuilds your books from bank statements, gets the returns ready, and keeps you current so this never happens again.
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