Missed a CRA Deadline? Here’s What Happens and How to Fix It
What Happens if You Miss a CRA Filing Deadline?
If you’ve ever missed a CRA filing deadline, you’re in good company. It happens to entrepreneurs, freelancers, and even accountants (yes, I’ve been there too). Sometimes you’re so busy meeting everyone else’s deadlines that your own slip right past you.
The good news: missing a CRA deadline is fixable.
The bad news: the CRA’s penalties and interest add up fast.
But the most important thing to remember is this: don’t ignore it. If you communicate with the CRA, they’ll usually give you a fair chance to fix it. If you go silent, you might end up on what I affectionately call their unofficial “shit list” (purely speculation, but it’s a theory many accountants share).
This blog breaks down what happens when you miss a CRA filing deadline, how penalties work, what steps to take, and how to avoid falling behind again.
Common CRA Filing Deadlines (and Why They Matter)
Different deadlines apply depending on your business structure and size. Here’s a quick overview of the most common ones for Canadian small business owners:
1. GST/HST Returns
Due: One month after your reporting period ends.
Frequency: New businesses often file annually, while established or high-revenue companies are moved to quarterly or monthly schedules.
Why it matters: Even if you haven’t collected any tax, if you’re registered for HST, you still have to file. The CRA assumes you did, and penalties apply if you don’t report.
CRA Resource: File a GST/HST return
2. Payroll Remittances
Due: Typically by the 15th of the following month.
Why it matters: CRA treats payroll as money held in trust for your employees. Late remittances are taken seriously - often more so than income tax.
CRA Resource: Remitting source deductions
3. Corporate Income Tax (T2)
File: Within 6 months of your fiscal year-end.
Pay: Within 3 months if you owe a balance.
Why it matters: There are separate penalties for filing late and paying late. Even if you can’t pay, filing on time reduces further penalties.
CRA Resource: Corporation income tax deadlines
4. Sole Proprietor Returns (T1)
File: By June 15
Pay: By April 30
Why it matters: Many self-employed folks miss this subtle detail - interest starts May 1, even if your return isn’t due until mid-June.
What Happens If You File Late
Missing a deadline doesn’t make you a bad business owner - it just means you’re human. But here’s what you can expect once the CRA’s system flags your account.
1. Late-Filing Penalty: If you owe taxes, the CRA charges a 5% penalty on the amount due, plus 1% for each whole month the return is late (up to 12 months).
Example:
If you owe $5,000 and file three months late:
5% × $5,000 = $250
1% × 3 months × $5,000 = $150
Total penalty: $400 (not including interest)
Source: Interest and penalties on late taxes - Personal income tax - Canada.ca
2. Repeat Offender? The Penalty Doubles. If you’ve filed late in any of the past three years, the CRA doubles the penalty to 10% of the balance owing, plus 2% per month (up to 20 months).
3. Interest Accrues Daily. Interest starts the day after your due date and compounds daily. The CRA updates interest rates quarterly, usually a few points above prime. Even small balances can grow alarmingly fast.
4. CRA Can Withhold Refunds. If you’re expecting a refund from another return, the CRA can hold it until all of your returns are filed. Even one missed year can delay your money.
5. Potential Collections Action. If you ignore repeated notices, the CRA can: garnish wages or payments, freeze bank accounts and register liens against property.
These steps are a last resort, but they do happen - especially when communication breaks down.
How to Fix It (and Soften the Damage)
1. File Right Away - Even If You Can’t Pay. The moment you file, late-filing penalties stop increasing. Even if you can’t pay the full balance, submit the return. You’ll still owe interest, but you’ll stop the clock on new penalties.
2. Request that the CRA waives penalties and interest. If the CRA has already assessed penalties and interest and you are hoping that they will reconsider, consider reviewing the following: Cancel or waive penalties and interest at the CRA - Canada.ca. This page will help you determine whether you might qualify for relief and walks you through how to submit your request.
3. Pay What You Can. Interest is charged only on the unpaid portion, so partial payments matter. If you owe $4,000 and can pay $2,000 today, you’ll only accrue interest on the remaining $2,000.
4. Contact the CRA (Seriously). I know - calling the CRA can feel like a nightmare. But if you’re upfront, they’re often surprisingly reasonable. Ask to set up a payment arrangement to pay in monthly installments.
As long as you stay responsive and make an effort, the CRA tends to meet you halfway. What they don’t tolerate is silence.
5. Use the Voluntary Disclosures Program (VDP). If you’ve missed multiple filings or underreported income, apply to the Voluntary Disclosures Program before the CRA contacts you. If accepted, the CRA may: waive penalties, reduce interest and avoid legal action.
This only works if you disclose voluntarily - once they contact you first, it’s too late.
What NOT to Do
Don’t wait. Don’t hope they’ll forget. And don’t assume you’ll “catch up later.”
When you ignore a notice, your account is flagged for escalation. The CRA won’t necessarily say so in writing, but in my experience, they become far less patient after repeated non-responses.
If you can’t fix everything immediately, at least acknowledge the issue and communicate.
Transparency earns grace; avoidance earns penalties.
Why the CRA Is So Strict
It’s easy to take penalties personally, but the CRA’s rigidity is about consistency, not cruelty. They rely on predictable enforcement to keep the system fair.
That said, the system can feel punishing - especially for small business owners juggling too many hats. You’re not a corporation with a finance department; you’re one person trying to do it all.
As an anti-capitalist CPA, I understand how easily these penalties can snowball into stress and shame. But shame doesn’t solve anything. Information, support, and structure do.
The CRA isn’t out to destroy small businesses - but they will hold you accountable. Understanding how their systems work helps you stay ahead of them.
How to Avoid Missing Deadlines Again
1. Automate Reminders. Add every CRA due date to your calendar and set recurring alerts. Include GST/HST, payroll, income tax, and installment payments.
2. Keep Your Books Updated Monthly. When your books are caught up, filings are less overwhelming. Even 30 minutes a week can prevent hours of chaos later.
3. Use Cloud-Based Software. Tools like QuickBooks Online or Xero automatically track deadlines, sync bank transactions, and simplify remittances.
4. Work With a Bookkeeper or CPA. If numbers aren’t your happy place (they aren’t for most people), hire help. A bookkeeper manages the day-to-day; an accountant ensures compliance and strategy. (If you’re not sure which you need, check out my post: Bookkeeper vs. Accountant - Do You Need Both?)
5. Create a CRA Buffer Fund. Set aside a small percentage of each payment you receive in a separate account. That way, when it’s time to remit HST or payroll deductions, the money’s already there.
6. Schedule Quarterly “Financial Health Checks”. Even if you’re a one-person business, set a date every three months to review your income, expenses, and upcoming deadlines. Think of it as financial hygiene - like flossing, but for your books.
What If You’re Neurodivergent or Easily Overwhelmed?
If you’re like me - someone who lives with ADHD or another form of neurodivergence - deadlines can feel like landmines. You know they’re there, but remembering and organizing around them can be another story entirely.
Here’s what helps:
Externalize reminders - visual calendars, sticky notes, or digital task apps.
Chunk large tasks - instead of “file HST return,” start with “log into CRA My Business Account.”
Outsource accountability - even one meeting a quarter with your bookkeeper can keep you grounded.
Being neurodivergent doesn’t mean you’re bad with money. It means you might need systems that work with your brain, not against it.
Key Takeaways
Filing late happens - the key is to act fast and communicate.
Late-filing penalty: 5% of balance owing + 1% per month (up to 12 months).
Repeat late filings: 10% + 2% per month (up to 20 months).
Interest: Compounded daily from the day after payment is due.
Fix it fast: File immediately, pay what you can, call the CRA, and consider the Voluntary Disclosures Program.
Prevent it: Automate reminders, stay organized monthly, and get help if you need it.
The CRA can feel intimidating, but they’re far more flexible with proactive, communicative taxpayers than with silent ones.
Final Thoughts
Missing a filing deadline doesn’t make you irresponsible - it makes you human.
The tax system is complicated, especially for small business owners who are trying to keep everything afloat. The key is knowing that you can recover and that support exists to get back on track.
Don’t let fear or embarrassment stop you from taking action. The sooner you file, the sooner the penalties stop accumulating - and the easier it is to move forward.
If you’ve missed a CRA filing deadline and aren’t sure where to start, let’s talk. Reach out HERE to connect - I’ll help you understand your options and make a plan to get back into good standing (without judgment).
And if this blog resonated with you, check out my post on Filing Your Taxes in Canada: When to DIY and When to Hire a Professional to learn how having the proper financial support in place can help you stay ahead of deadlines and avoid future CRA penalties altogether.