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PricingService areasAll services →CRA Late-Filing Penalty & VDP Savings Calculator
CRA Late-Filing Penalty & VDP Savings Calculator
Behind on a personal (T1), corporate (T2) or GST/HST return? This free calculator estimates the late-filing penalty and the daily-compounded interest the CRA can charge on what you owe, then shows how much the Voluntary Disclosures Program (VDP) could take off. It takes about two minutes and you don’t need to share your name to see the result.
It’s built and kept current by T-Ledgers, a CPA-led accounting firm practising since 2020 and led by Wajahat Ajmal, CPA, FCCA. We use the same rules when we help clients catch up on overdue filings, including overdue T2 corporate tax returns.
Last updated: October 15, 2026
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Together with a demand to file, this triggers the higher repeat penalty.
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VDP relief is highest when the CRA hasn't contacted you yet.
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Used to flag GST/HST registration (over $30,000).
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At risk: estimated total owing without VDP
$0
Potential VDP savings
$0
Red flags
Get your full breakdown
See the year-by-year numbers and the side-by-side VDP comparison. A CPA can review it with you.
We'll only use this to send your estimate and follow up. No spam.
File late, no VDP
Tax
Penalties
Interest
Total
File through VDP
Tax
Penalties
Interest
Total
| Period | Tax | Penalty | Interest |
|---|
Your catch-up price: from $1,800 per year + HST/GST, fixed
- Caught up in weeks, usually
- One written price, no surprise bills
- VDP application prepared by a CPA
How the calculator works
- Pick the issue: unfiled returns, unreported income or unfiled GST/HST returns.
- Tell us who is filing: a corporation (with its fiscal year-end month) or a self-employed individual.
- Enter the years behind and your net profit (or the tax you think you owe), plus a few yes/no questions: has the CRA sent a demand to file, and has it contacted you about this?
- See two numbers: what you could owe if you file late without the VDP, and what you could save by applying to the VDP first.
What the estimate includes
- The standard late-filing penalty and, if you answer yes to a demand to file, the repeat-filer penalty
- GST/HST late-filing penalties for unfiled sales tax returns
- Interest at the CRA prescribed rate, compounded daily, on the tax and penalties owing
- A side-by-side “file late” versus “file through VDP” comparison, year by year
- Red flags worth raising on a call, such as unreported foreign property (Form T1135)
It’s an estimate, so it leaves out instalment interest, tax credits, losses and other deductions. The figures are a range of about 20% either side. For your exact numbers, a CPA reviews your situation on a free call.
The CRA late-filing penalty
If you file a T1 or T2 return late and you owe tax, the CRA charges a penalty of 5% of the tax unpaid on the filing due date, plus 1% of that amount for each complete month the return is late, up to 12 months. The most this standard late-filing penalty can reach is 17% of the unpaid tax (Income Tax Act, s.162(1)).
The repeat-filer penalty is harsher: 10% plus 2% a month, up to 20 months, so up to 50% of the unpaid tax. It applies when three things are true: you filed late again, the CRA sent you a demand to file for that year, and you already had a late-filing penalty for any of the three previous tax years (s.162(2)).
← Swipe to compare →
| Return | Standard late-filing penalty | Repeat late filing (demand + earlier penalty) | Law |
|---|---|---|---|
| T1 personal return | 5% + 1% a month, up to 12 months (max 17%) | 10% + 2% a month, up to 20 months (max 50%) | ITA s.162(1), (2) |
| T2 corporate return | 5% + 1% a month, up to 12 months (max 17%) | 10% + 2% a month, up to 20 months (max 50%) | ITA s.162(1), (2) |
| GST/HST return | 1% + 0.25% a month, up to 12 months (max 4%) | Same formula (no repeat-filer penalty; $250 extra if you ignore a demand to file, ETA s.283) | ETA s.280.1 |
The penalty is worked out on the tax that was still unpaid when the return was due. If you owed nothing, there’s no late-filing penalty, but you should still file, because a missing return can hold up refunds and benefits and lead to a demand to file.
Daily-compounded interest
Interest runs on top of penalties. The CRA charges interest at the prescribed rate on tax that’s unpaid after the balance-due day (ITA s.161(1)), and that interest is compounded daily (ITA s.248(11)). The rate is set every quarter. For October 1 to December 31, 2026, the rate on overdue tax is 7% (CRA prescribed interest rates, Q4 2026).
An illustrative example (not a client story). A corporation owed $10,000 of tax and filed its T2 two years late. The standard late-filing penalty is capped at 17%, so $1,700. Interest starts earlier than the penalty: it runs from the balance-due day, usually three months before the T2 filing deadline, so by the time the return is filed it has run for about 27 months. At the Q4 2026 rate of 7%, compounded daily, that’s about $1,705 of interest on the tax alone. That’s roughly $3,400 on top of the $10,000, and interest keeps growing until the balance is paid.
The 2025 VDP changes: general and partial relief
The VDP lets you come forward and correct past errors or omissions before the CRA acts. If your application is accepted, you still pay the tax, but the CRA can waive some or all of the penalties and part of the interest, and you won’t be referred for criminal prosecution. The CRA grants this relief under its discretion in ITA s.220(3.1) (for GST/HST, ETA s.281.1).
For applications received on or after October 1, 2025, the CRA replaced the old rules with two relief tiers (IC00-1R7, CRA: Changes to the VDP):
← Swipe to compare →
| Relief tier | When it applies | Penalty relief | Interest relief |
|---|---|---|---|
| General relief | Unprompted: the CRA hasn’t contacted you about the issue (a general education letter doesn’t count) | 100% | 75% |
| Partial relief | Prompted: the CRA has already raised the specific issue with you (for example, a letter identifying an error, or a request or demand to file with a deadline), or holds third-party information about it | Up to 100% | 25% |
The changes also opened the VDP to people the CRA has already contacted, so a letter about a specific issue no longer rules you out. The program is still closed if an audit or investigation (by the CRA or another authority) has started against you or a related taxpayer on the issue you’re disclosing.
These rules still apply in 2026; relief levels haven’t changed since October 1, 2025. You can request a free, anonymous pre-disclosure discussion through the CRA’s online callback form.
What the CRA needs from you
- Form RC199, with every known error or omission disclosed
- Supporting returns and documents for the last six years (ten years if foreign income or assets are involved, four years for GST/HST)
- At least one tax year that’s at least a year past its filing due date, with penalties or interest that apply
- Payment of the estimated tax, or a request for a payment arrangement
The VDP doesn’t cover returns that result in a refund, penalties and interest that have already been assessed, or new or changed elections. GST/HST disclosures follow the same tiers under GST/HST Memorandum 16-5-1, and eligible wash transactions get 100% relief of penalties and interest. Our voluntary disclosure service prepares and files the application for you, and our CRA voluntary disclosure page explains the process across Ontario.
GST/HST late-filing penalties
A late GST/HST return with a balance owing gets a penalty of 1% of the amount owing, plus 25% of that 1% for each complete month the return is late, up to 12 months (Excise Tax Act, s.280.1). That tops out at 4% of the unpaid net tax, which is lower than the income tax penalty, but GST/HST filings are often monthly or quarterly, so several returns can be late at once.
Interest on overdue GST/HST is charged at the prescribed rate (ETA s.280(1)) and compounded daily (ETA s.124(1)). The Q4 2026 rate is 7% (CRA: GST/HST interest). There’s no late-filing penalty if you owe nothing or the CRA owes you a refund (CRA: GST/HST filing penalties).
Getting caught up with T-Ledgers
Penalties and interest stop growing once your returns are filed and the balance is paid. Our catch-up bookkeeping service rebuilds the missing years and files them, and corporate catch-up is usually done in weeks. Corporate catch-up is priced per year, from $1,800 per year of catch-up work + HST/GST, and each year includes the bookkeeping, the GST/HST returns and the T2 corporate tax return. Personal T1 returns are quoted separately.
- A fixed, written price before any work starts
- VDP application prepared by a CPA when it makes sense for you
- Every bank and credit card account reconciled for each year we file
- We deal with the CRA for you while we catch up
Want to see the per-year investment for your corporation? Try our catch-up bookkeeping investment estimator. For more on your options, read back tax filing: 5% penalty, VDP or relief.
Sources
Law and CRA guidance: ITA s.162(1) and (2); ITA s.161(1); ITA s.248(11); ITA s.220(3.1); ETA s.280.1; ETA s.280(1); ETA s.124(1); ETA s.281.1; ETA s.283; IC00-1R7; CRA VDP; CRA prescribed interest rates, Q4 2026.
Reviewed by Wajahat Ajmal, CPA, FCCA. Official sources checked October 15, 2026.
Frequently asked questions
How much is the CRA late-filing penalty?
For T1 and T2 returns, it’s 5% of the tax unpaid on the due date plus 1% for each complete month late, up to 12 months, so up to 17% (Income Tax Act s.162(1)). If the CRA sent a demand to file and you had a late-filing penalty in any of the three previous years, it rises to 10% plus 2% a month, up to 20 months (s.162(2)).
Is there a penalty if I file late but owe nothing?
No. The late-filing penalty is a percentage of the tax unpaid on the due date, so if you owe nothing there’s no penalty. You should still file, because missing returns can delay refunds and benefits.
How does the CRA charge interest on overdue tax?
Interest is charged at the prescribed rate on tax unpaid after the balance-due day (ITA s.161) and compounded daily (s.248(11)). The rate on overdue tax is 7% for October 1 to December 31, 2026. It’s reset every quarter.
How much can the Voluntary Disclosures Program save me?
For applications received on or after October 1, 2025, unprompted applications normally get general relief: 100% of penalties and 75% of interest. Prompted applications normally get partial relief: up to 100% of penalties and 25% of interest. You still pay the tax (IC00-1R7).
Can I still apply to the VDP if the CRA has contacted me?
Often yes. Since the October 2025 changes, an application made after the CRA raises a specific issue is usually treated as prompted and gets partial relief. You can’t use the VDP for an issue that’s already under audit or investigation (by the CRA or another authority) involving you or a related taxpayer.
What is the penalty for filing a GST/HST return late?
1% of the amount owing plus 25% of that 1% for each complete month late, up to 12 months, so up to 4% (Excise Tax Act s.280.1). Interest at the prescribed rate, compounded daily, applies on top.
Is this calculator's estimate exact?
No. It’s a range of about 20% either side and leaves out instalments, credits and deductions. Book a free 30-minute call and a CPA will review your numbers and give you a fixed, written price to get caught up.
More questions? See our catch-up bookkeeping FAQs or our general FAQ.
Behind on your returns? Let's stop the penalties growing
Book a free 30-minute call. A CPA will look at your estimate, tell you whether the VDP makes sense, and give you a fixed, written price to get every return filed. If you have a lower written quote for the same work, show it to us before you sign the proposal and we’ll match it.
Call (866) 254-5368 or email info@tledgers.ca. A 24/7 receptionist answers, so a real person picks up.
Disclaimer: The articles, calculators and other content on this website are general information only, not tax, accounting, legal or financial advice. Calculator results are estimates based on the rates and assumptions shown and may not match your situation. Tax rules change and depend on your province, business structure and the facts of your case, so speak with a CPA, and a lawyer where legal matters are involved, before acting. T-Ledgers accepts no liability for decisions made based on this information. Book a free consult with T-Ledgers.