CRA Penalties and Interest: Late Filing, Repeated Omissions and T1135

CRA penalties and interest apply when a return is late, income is left off, a statement is false or a foreign reporting form such as the T1135 is not filed on time. The rules differ by type of failure, and the figures below are those the Canada Revenue Agency publishes for 2025 returns filed in 2026. Interest is separate from penalties: it runs from the day after the due date on unpaid amounts and compounds daily. Knowing which charge you face tells you whether to ask for relief, apply to the Voluntary Disclosures Program or simply file and pay.

What are the main CRA penalties and interest charges?

Quebec residents pay only the federal repeated omission penalty, because Revenu Québec assesses the provincial one. For non-residents and deemed residents, the provincial or territorial penalty applies only if provincial or territorial tax is payable. The CRA says it may grant penalty relief on both the repeated omission and false statement penalties if you voluntarily disclose before the CRA contacts you or a related person. See the Voluntary Disclosures Program.

What are the foreign reporting penalties?

For T1135 and other foreign reporting returns, the CRA states the late-filing penalty is the greater of $100 or $25 for each day the return is late, to a maximum of $2,500. If a person knowingly or through gross negligence fails to file, the penalty is $500 for each month the return is late, to a maximum of $12,000, less penalties already levied; after a CRA demand it is $1,000 per month, to a maximum of $24,000. If the return is more than 24 months late and the failure is knowing or grossly negligent, a further penalty of 5 percent of the cost of the property (for the T1135) applies once per year of non-filing. For the T1134 and T1141, penalties may be waived when a filer shows that, despite due diligence, some information cannot be obtained, provided it is filed within 90 days of receiving it.

See our guides to the T1135 and T1134 and related forms. The IRS has its own foreign reporting penalties; compare them in IRS foreign reporting penalties.

How does CRA interest work?

The CRA charges arrears interest at the prescribed rate, which the CRA can change every three months. Interest is compounded daily on any unpaid balance, starting the day after the due date and including reassessment amounts. The CRA's guidance for corporations says the prescribed rate is reset every three months based on the average yield of three-month treasury bills sold in the first month of the previous quarter, and that arrears interest also applies to the instalment penalty from the balance-due day until it is paid. The CRA publishes each quarter's rate on its prescribed interest rates page, so check it directly. We do not quote the current rate because it changes.

If you cannot pay by the due date, file on time anyway; this avoids the late-filing penalty even though interest still runs.

How to ask for relief: taxpayer relief step by step

1. Confirm the timing. The CRA considers penalty requests only for a tax year or fiscal period ending in any of the 10 calendar years before the year of your request, and interest only if it accrued in those years.
2. Identify the ground. The CRA lists extraordinary circumstances (such as a flood or fire, serious illness, an accident or serious emotional or mental distress), financial hardship (for interest, once the CRA confirms you cannot pay), and CRA errors or delays, such as processing delays or incorrect information.
3. Pay what you can and file everything due. The CRA says meeting the criteria does not guarantee relief.
4. Collect evidence. Gather medical notes, dates, correspondence and proof of what you did to comply.
5. Submit the request. The CRA says you can submit online or by mail, and the CRA corporate guidance names My Account, My Business Account, Represent a Client or Form RC4288.
6. Track the request. The CRA gives an average processing time of approximately 16 months, so keep paying or arrange payment in the meantime, because interest generally keeps running on unpaid amounts.

The Taxpayer Bill of Rights includes the right to relief from penalties and interest where circumstances beyond your control prevented you from meeting your obligations.

How do Canada, the US and India compare?

See IRS penalty abatement, India penalties and interest and the Canadian filing calendar.

A worked example

Sanjay, a Brampton resident, files his 2025 T1 four full months late with $4,000 owing. The late-filing penalty is 5 percent ($200) plus 1 percent for each of four full months ($160), or $360, before interest. He also owns a US brokerage account that required a T1135, and he files the form 90 days late. At $25 a day the penalty is $2,250, under the $2,500 maximum, assuming the failure was not knowing or grossly negligent. He then asks his Canadian CPA about relief, which depends on the cause of the delay. The figures are hypothetical and illustrate the arithmetic only.

Mistakes to avoid

• Skipping the T1135 because the account earns little.
• Assuming a first late-filing penalty means the repeat rate is off the table next year.
• Waiting for relief before paying; interest keeps running.
• Missing the 10-year window for older years.
• Filing a voluntary disclosure after the CRA has already contacted you.

How we can help

We do not represent clients before the CRA and do not prepare Canadian returns. Your Canadian CPA or tax lawyer handles penalties, relief requests and voluntary disclosures. Our role from our Aurora, Illinois area base is the U.S. side: reconciling Canadian filings with your US return, FBAR, Form 8938 and foreign tax credits, and coordinating so all three countries tell the same story. We cannot promise relief. See foreign account and asset reporting and the glossary of penalty terms. Browse the notices hub for every guide in this series.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.