GST/HST Penalties and Interest for Filing and Completing Returns

If you are registered for the Goods and Services Tax (GST) / Harmonized Sales Tax (HST), the Canada Revenue Agency (CRA) may charge penalties and interest when you do not properly complete or file your GST/HST return on time, fail to file electronically when required, or report information incorrectly. These charges apply in addition to any GST/HST you owe.

📅 Penalties for Late Filing

If you file your GST/HST return after the due date and you owe an amount to the CRA, you may be charged a late-filing penalty. The basic calculation generally works like this:

  • A — 1% of the amount owing on the return
  • B — 25% of that 1% amount
  • C — number of complete months the return is overdue (up to a maximum of 12 months)

The penalty equals A + (B × C). If you file late but do not owe any GST/HST (e.g., nil return or refund due), you generally will not be charged this penalty.

⚠️ Penalty for Failing to File Electronically

If you are required to file your GST/HST return electronically and you do not, the CRA may charge a penalty:

  • $100 for the first instance
  • $250 for each subsequent instance

This applies even if your return shows a nil amount or a refund.

📊 Penalties for Inaccurate or Incomplete Reporting

If you file a return and don’t include required information or report amounts incorrectly, the CRA may assess a penalty for inaccurate reporting. Typical situations include misreporting input tax credits or transitional tax adjustments.

The penalty is typically at least 5% of the misreported difference plus 1% per month the return remains uncorrected, up to 10% in total.

📉 Demand to File and Ignoring Requests

If the CRA issues a formal demand to file your GST/HST return and you still do not file, you may face an additional penalty, such as a flat $250 charge plus any other applicable penalties.

💸 Interest on Late or Incorrect Payments

In addition to penalties, interest may be charged on amounts you owe that are paid late or are insufficient. Interest is calculated daily on the outstanding balance from the due date until the date the amount is paid in full.

The CRA’s prescribed interest rates can change quarterly and apply to most types of overdue amounts, including GST/HST balances owing.

📌 How to Avoid Penalties and Interest

  • File your returns on time — even if you cannot pay the full amount owing, filing before the due date avoids late-filing penalties; interest may still accrue on unpaid amounts.
  • File electronically when required to minimise administrative penalties.
  • Report accurately — ensure all required fields and amounts are correct.

📍 Cancelling or Waiving Penalties/Interest

In extraordinary circumstances — such as disability, disaster or CRA error — you may request that the CRA cancel or waive penalties and interest under the taxpayer relief provisions. Approval is discretionary and requires documentation.

🔗 Related Resources