What is the penalty for filing my Ontario tax return late?

The late-filing penalty is set by federal law and applies to your T1 return whether you are in Ontario or any other province. If you file after the deadline and owe taxes, the CRA charges a penalty of 5% of the balance owing, plus an additional 1% for each full month the return is late, up to a maximum of 12 months. This means the maximum first-year penalty is 17% of the unpaid balance.

If you have been assessed a late-filing penalty in any of the previous three years, a repeated late-filing penalty is doubled: 10% of the balance owing plus 2% per month, up to 20 months. Interest on both the unpaid tax and the penalty is also charged, compounded daily, from May 1 onward.

If you have a refund coming, there is no late-filing penalty — but you will lose the use of the money for longer. Importantly, not filing at all is far worse than filing late with a partial payment, because penalties and interest accumulate and the CRA may also reassess under its arbitrary assessment powers. If you are behind on filing multiple years, it is often best to file all outstanding returns at once with the help of a tax professional, possibly using the CRA's Voluntary Disclosures Program if you have unreported income.