What Happens If I Don’t File My Taxes? (2024)

The deadline to file (and pay) your taxes for the 2023 tax year is April 30, 2024. If you or your spouse/common-law partner are self-employed, the deadline is June 17, 2024 (since June 15, the actual deadline, is a Saturday).

If you miss the tax filing deadline, you can still go ahead and submit your return. But there are consequences for filing late.

Related: Where To Do Your Taxes In Canada

Filing a tax return late costs more than just missing out on an unclaimed tax refund.

If you file after the due date and have a balance owing, you’ll be charged a late-filing penalty. Your benefit payments will also be delayed.

The late filing penalty is 5% of your 2023 balance owing, plus an additional 1% for each month that you file after the due date, to a maximum of 12 months.

If the CRA charged you a late-filing penalty for 2020, 2021 or 2022 and requested a formal demand for a return, your late-filing penalty for 2023 will be 10% of your balance owing, and you will be charged an additional 2% for each full month that you file after the due date, to a maximum of 20 months.

If you don’t file a tax return because you don’t expect to owe taxes as you don’t meet the basic person income threshold, you won’t face any penalties—but you should still consider filing for these reasons:

• You might qualify for a refund.
• You may be eligible for benefits and credits, such as the GST/HST credit or Canada child benefit
• You can start building RRSP contribution room.
• Your most recent Notice of Assessment, which you receive from the CRA when you file your taxes, may be required if you’re applying for a loan or mortgage.

If you have a balance owing for the 2023 tax year and you’re unable to pay it by the deadline, the CRA will start charging you compound daily interest as of May 1, 2024, on any unpaid amount. Currently, the interest rate charged on overdue taxes is 10%.

If you’re required to pay by instalments and you fail to pay, pay less or pay late, you’ll be charged instalment interest, which is compounded daily at the prescribed interest rate that can change every three months. You may also need to pay an instalment penalty if your instalment interest charges are more than $1,000.

What If I Can’t Afford To Pay Taxes?

If you haven’t filed a return because you’re financially unable to pay your taxes, you should contact the CRA to make an arrangement. The following options may be available:

Make a partial payment: This reduces the amount of interest you need to pay on the outstanding unpaid amount.

Set up a payment arrangement: This allows you to pay your balance to the CRA with regular pre-arranged payments over time.

Defer your payment: You may be able to defer your repayment to a later date when you are able to pay.

Request taxpayer relief: In some situations, you can request relief from penalties and interest, and reduce the amount you owe.

If you fail (or refuse) to take steps to pay your taxes, the CRA can take legal action against you. This may result in a garnishing of wages or other income, or even a seizure of assets.

According to the collections limitation period (CLP) for individual tax, the CRA has 10 years to collect a tax debt. After that period, the CRA can not take any further action to collect the debt, but the debt is still outstanding.

How Long Can You Go Without Filing Taxes?

Generally, if you have unfiled tax returns, you should file them as soon as possible to minimize any penalties.

The consequences for tax evasion, defined by the CRA as falsifying records and claims, purposely not reporting income, inflating expenses and/or claiming a fraudulent refund or benefit, are severe. If convicted, significant cases of tax evasion can result serious consequences:

• You must still pay the full amount of taxes owing, plus interest and any penalties.
• You may be fined up to 200% of the taxes evaded.
• You may be imposed a jail term of up to five years.

Once you’ve submitted your income tax form on time or late, either with the help of an accountant, a tax-filing service or by mail, the CRA will review and process your tax return and then send you a notice of assessment. This will confirm any refund or balance owing as noted on your tax return, as well as any interest or penalties. You will also receive (either by mail or direct deposit) any benefits payments, such as the Canada child benefit, that were put on hold until you filed.

Bottom Line

Filing your taxes can be stressful, but not filing them can be much worse. The longer you wait, the more complicated (and costly) your situation may become. At the very least, even if you cannot pay your balance owing, you should file on time to avoid being charge the late-filing penalty.

Related: Tax Prep Checklist: Everything You Need To File Your 2023 Taxes