Missing a filing deadline or remittance date triggers automatic penalties — and interest compounds daily on top of them. Here is a plain-language breakdown of the main penalty structures that apply to Canadian corporations and their owners.

Income Tax Penalties

Based on late filing

  • → CRA: 5% of unpaid tax + 1% per month, up to 12 months
  • → If a formal demand is issued, the penalty doubles to 10% + 2%/month up to 20 months
  • → Revenu Québec applies equivalent penalties on provincial income tax

Sales Tax Penalties

GST/HST — based on late filing

  • → 1% of unpaid tax + 0.25% per month, up to 12 months

QST — based on late remittance (no grace period)

  • → 7% if 1–7 days late
  • → 11% if 8–14 days late
  • → 15% if more than 14 days late

Payroll Deduction Penalties

CRA — based on late remittance

  • → 3% if 1–3 days late
  • → 5% if 4–5 days late
  • → 7% if 6–7 days late
  • → 10% if more than 7 days late

Revenu Québec — based on late remittance

  • → 7% if 1–7 days late
  • → 11% if 8–14 days late
  • → 15% if more than 14 days late

Note: Interest accrues daily on all unpaid amounts and is not tax deductible. Penalties can accumulate quickly — the best protection is a reliable remittance calendar and working with a CPA who tracks your deadlines.