How does the CRA calculate penalties and interest on late HST filings in Ontario?

The CRA charges both interest and penalties for late HST filings and payments. Interest on unpaid HST is compounded daily at the prescribed rate, which changes quarterly and is set at the basic rate plus a surcharge. Even a few weeks of delay generates meaningful interest, especially on larger balances.

The late-filing penalty is 1% of the unpaid HST as of the filing deadline, plus 0.25% for each complete month the return remains unfiled, up to a maximum of 12 months — so the maximum late-filing penalty is 4% of the outstanding balance (1% + 3 × 0.25% over 12 months at maximum). If this is your second or third late filing within three years, the CRA applies a more severe penalty formula.

Repeated failures to file or to report income can also attract gross negligence penalties (25% of the amount) in serious cases. The CRA does have a taxpayer relief program that can waive penalties and reduce interest in cases of genuine hardship, illness, or circumstances beyond the taxpayer's control — but this is discretionary and not automatic.