# GST/HST late filing penalty: what the CRA charges for a late return and how to keep it small

Source: https://canadataxdesk.com/gst-hst/gst-late-filing-penalty
Publisher: Canada Tax Desk (canadataxdesk.com), independent editorial site
Topic: GST/HST for Business
Last updated: 2026-10-20

> The GST late filing penalty is 1% of the amount owing plus 25% of that 1% for each complete month the return is late, up to 12 months, so it can reach 4% of the balance. A late return that shows nothing owing or a refund has no late-filing penalty. Interest at the CRA's prescribed rate, 7% for late 2026, runs separately on unpaid tax, and paper filing or ignoring a demand to file adds fixed penalties.

## Key facts

- Late-filing penalty: 1% of the amount owing, plus 0.25% of it for each complete month late
- Maximum late-filing penalty: 4% of the amount owing (12 months)
- No late-filing penalty when: The return shows $0 owing or a refund
- Not filing electronically: $100 for the first return, $250 for each later one
- Ignoring a demand to file: $250, on top of other penalties
- Interest on overdue amounts: 7% prescribed rate, July 1 to December 31, 2026, compounded daily

## What is the penalty for filing a GST return late?

If you file a GST/HST return after its due date and the return shows an amount owing, the CRA charges a late-filing penalty worked out as A + (B x C). A is 1% of the amount owing, B is 25% of A, and C is the number of complete months the return is overdue, up to a maximum of 12 ([CRA, GST/HST filing penalties](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/file-gst-hst-return/reporting-requirements-deadlines/gst-hst-filing-penalties.html)).

In plain numbers, the first 1% applies as soon as the return is late, even by a day, and each complete month adds another 0.25% of the balance. Twelve months is the cap, so the GST late filing penalty can never be more than 4% of the amount owing on that return.

| Complete months late | Penalty | Calculation |
| --- | --- | --- |
| 0 (a few days late) | $50.00 | 1% of $5,000 |
| 1 | $62.50 | $50 + ($12.50 x 1) |
| 3 | $87.50 | $50 + ($12.50 x 3) |
| 6 | $125.00 | $50 + ($12.50 x 6) |
| 12 or more (maximum) | $200.00 | $50 + ($12.50 x 12) |

GST/HST late-filing penalty on a $5,000 balance owing (CRA formula, before interest)

The due date itself depends on your reporting period: one month after the period for monthly and quarterly filers, and three months after year end for most annual filers. Our [GST/HST filing deadlines guide](https://canadataxdesk.com/gst-hst/gst-filing-deadlines) lists the dates for each period.

## Is there a penalty for a late GST return if I owe nothing?

No late-filing penalty applies when the return shows $0 owing or the CRA owes you a refund, because the penalty is a percentage of the balance owing. That does not make a late nil or refund return free of consequences.

- The penalty for not filing electronically applies even to a nil or credit return, according to the CRA's 2024 notice on electronic filing.
- If the CRA sends a demand to file and you ignore it, a $250 penalty is added.
- A refund for the period, or for later periods, can wait until the missing returns are filed.
- A sole proprietor with unfiled GST/HST returns may see the CRA hold back a personal income tax refund.

If you had no sales at all, the return still has to be filed. Our guide to [filing a nil GST/HST return](https://canadataxdesk.com/gst-hst/file-nil-gst-return) walks through it in a few minutes online.

## What other GST/HST penalties can the CRA charge?

The CRA lists several filing penalties besides the late-filing one. They can apply on the same return, so a business that files late, on paper and only after a demand could face three of them.

| Penalty | When it applies | Amount |
| --- | --- | --- |
| Late filing | Return filed after the due date with an amount owing | 1% of the balance plus 0.25% per complete month, up to 12 months |
| Not filing electronically | A registrant required to file electronically files on paper | $100 for the first return, $250 for each later return |
| Ignoring a demand to file | The CRA demands a return and you do not file it | $250, plus any other penalties |
| Wrong amounts in certain fields | Specific amounts on an electronically filed return, such as recaptured input tax credits or some housing amounts, are omitted or misreported | Generally 5% of the difference plus 1% a month until corrected, up to 10% |

GST/HST filing penalties listed by the CRA

Electronic filing has been required for all GST/HST registrants except charities and selected listed financial institutions for returns of reporting periods ending in 2024 and later ([CRA, reporting requirements and deadlines](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/file-gst-hst-return/reporting-requirements-deadlines.html)). [GST/HST NETFILE](https://canadataxdesk.com/gst-hst/gst-netfile-online-return) and My Business Account both count as electronic filing.

> **GST penalties are not a business expense:** The CRA says penalties for incorrect GST/HST filing are not deductible for income tax purposes, so they cannot be written off on your T2125 or corporate return.

## How much interest does the CRA charge on late GST/HST?

Interest applies to an overdue GST/HST balance and to a late or short instalment. It is charged at the CRA's prescribed rate for overdue taxes, compounds daily, and keeps running until the balance is paid. The rate was 7% for July 1 to September 30, 2026 and is 7% for October 1 to December 31, 2026; the CRA sets it again every quarter.

The CRA's GST/HST penalty page lists interest, not a separate penalty, for paying late. Filing on time therefore matters more than paying on time: a return filed by the due date avoids the late-filing penalty even if you cannot pay, and interest then runs only on the unpaid part.

As a rough illustration, $5,000 of GST/HST paid 90 days late at 7% compounded daily costs about $87 in interest. Annual filers who also owe instalments should read our page on [GST/HST instalments](https://canadataxdesk.com/gst-hst/gst-hst-instalments), because late instalments attract their own interest.

## Worked example: a quarterly return filed three months late

An Ontario contractor files quarterly. His return for April 1 to June 30, 2026 shows $6,000 of net tax and was due Friday, July 31, 2026. He files and pays on Monday, November 2, 2026.

1. Complete months late: August 31, September 30 and October 31 have passed, so C = 3.
2. A = 1% of $6,000 = $60.
3. B = 25% of $60 = $15.
4. Late-filing penalty = $60 + ($15 x 3) = $105.
5. Interest on $6,000 for the 94 days from July 31 to November 2 at 7% compounded daily = about $109.

Together that is roughly $214 on a $6,000 return. Had he filed on July 31 and paid on November 2, the $105 penalty would not apply and only the interest would remain.

## Can the CRA cancel GST/HST penalties and interest?

The CRA can cancel or waive GST/HST penalties and interest only in extraordinary circumstances, under its taxpayer relief provisions. Those are situations that stopped you from filing or paying on time, such as a serious illness, a natural disaster or a delay or error by the CRA itself. The tax itself is never waived.

A request can cover penalties and interest for the 10 calendar years before the year you apply. You can ask online through your CRA business account or with Form RC4288; our [RC4288 taxpayer relief guide](https://canadataxdesk.com/filing/rc4288-taxpayer-relief-request) explains what to include and how long a decision takes.

### How to keep a GST penalty as small as possible

- File every return by the due date, even when you cannot pay; the late-filing penalty depends on filing, not paying.
- Pay whatever you can now, since daily interest only runs on the unpaid part.
- File electronically through NETFILE or your CRA account to avoid the $100 and $250 paper-filing penalties.
- Answer a demand to file straight away, before the $250 penalty applies.
- If periods are already missed, file each one separately; every reporting period needs its own return.

## Common questions

### What are the penalties for late GST filing in Canada?

The CRA charges 1% of the balance owing plus 0.25% of the balance for each complete month the return is late, up to 12 months. Separate penalties apply for filing on paper when you must file electronically ($100, then $250) and for ignoring a demand to file ($250).

### Is there a penalty for filing a nil GST return late?

There is no late-filing penalty when nothing is owed. A nil return filed on paper can still trigger the $100 or $250 penalty for not filing electronically, and ignoring a CRA demand to file costs $250.

### Is there a penalty for paying GST late?

The CRA charges interest on an overdue GST/HST balance at its prescribed rate, 7% for the second half of 2026, compounded daily from the due date. The late-filing penalty applies only if the return itself is late.

### Can I get my GST late filing penalty waived?

Possibly, if extraordinary circumstances such as serious illness, a disaster or a CRA error stopped you from filing on time. Ask for taxpayer relief online or with Form RC4288 within 10 calendar years.

### Are GST/HST penalties tax deductible?

No. The CRA says penalties for incorrect GST/HST filing are not deductible for income tax purposes.

### Do the same GST penalties apply in Quebec?

Most Quebec businesses file their GST and QST returns with Revenu Québec rather than the CRA, so penalty notices for those returns come from Revenu Québec. Check its rules for the amounts that apply to you.

## Sources

- [GST/HST filing penalties](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/file-gst-hst-return/reporting-requirements-deadlines/gst-hst-filing-penalties.html)
- [Reporting requirements and deadlines, GST/HST](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/file-gst-hst-return/reporting-requirements-deadlines.html)
- [Businesses: Are you affected by the change to GST/HST electronic filing requirements?](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2024/businesses-affected-change-gst-hst-electronic-filing-requirements.html)
- [Prescribed interest rates, third quarter 2026](https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates/2026-q3.html)
- [Prescribed interest rates, fourth quarter 2026](https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates/2026-q4.html)
- [Cancel or waive penalties and interest](https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/cancel-waive-penalties-interest.html)