Can I ask CRA to cancel or waive interest and penalties?

Yes. The taxpayer relief provisions in the federal Income Tax Act allow CRA to cancel or waive interest and penalties when certain conditions are met. The three main grounds for relief are: circumstances beyond your control (such as a natural disaster, serious illness, or accident that prevented you from meeting a tax obligation); CRA error or delay that caused or contributed to the interest or penalty; and financial hardship, where paying the full amount would cause you undue hardship.

Relief is not automatically granted — you must apply using CRA's prescribed form and provide supporting documentation that clearly establishes the qualifying circumstances. CRA generally only considers requests relating to years within ten years of the calendar year in which you make the request.

Taxpayer relief requests often take many months for CRA to process, and the outcome is at CRA's discretion. If your request is denied, you can ask for a second review within CRA, and then apply for judicial review in Federal Court if the decision appears unreasonable. Relief is most commonly granted for genuine financial hardship or demonstrable CRA administrative error, not simply because you disagree with the underlying tax assessment.