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GST/HST Late Filing Penalty and Interest

Short answer: if you file a GST/HST return late and you owe money, the CRA charges a penalty of 1% of what you owed, plus a quarter of 1% for each full month you’re late, up to 12 months. The most you can be charged is 4%. On top of that, the CRA charges interest on any amount you haven’t paid by the deadline, at 7% for 1 October to 31 December 2026, compounded daily. If you owe nothing, or you’re due a refund, there is no late filing penalty. And you can ask the CRA to cancel penalties and interest.

This guide is for registered Canadian online sellers on Shopify, WooCommerce, BigCommerce, Etsy and Amazon who missed a deadline, or want to avoid doing so. For the deadlines themselves, see how to file a GST/HST return.

What will it cost me? Find your situation

Section titled “What will it cost me? Find your situation”
Your situationLate filing penaltyInterestOther
Filed late, balance owingYes: 1% + 1/4 of 1% a month, max 4%Yes, from the day after the payment deadline
Filed on time, paid lateNoYes
Filed late, owe nothing (nil return)NoNoYou still have to file
Filed late, refund dueNoNoThe CRA pays you interest on refunds
Ignored a demand to fileLate filing penalty if you oweYes$250 extra
Filed on paper when you had to file electronically$100, then $250 for each later return
Annual filer who paid a late or short instalmentNoInstalment interest
Never registered when you should haveYes, on each missed return with tax owingYesSee the never-registered case

The late filing penalty

Section titled “The late filing penalty”

The CRA calls this the penalty for failure to file a return, and it is set by section 280.1 of the Excise Tax Act. The formula is A + (B × C):

LetterWhat it is
A1% of the amount you owed
B25% of A (so 0.25% of the amount you owed)
CThe number of complete months the return is late, up to a maximum of 12

Four things to know:

  • It only applies when you owe money. If you have $0 owing or the CRA owes you a refund, there is no penalty.
  • The amount is what was still unpaid on the filing deadline. If you paid part of your tax before the deadline, the penalty is calculated on what was left. Paying on time shrinks the penalty even if you file late.
  • Only complete months count. A return filed 25 days late has C = 0, so you pay only the 1%. The first extra 0.25% arrives once a full month has passed.
  • The cap is 4%. After 12 complete months the penalty stops growing: 1% plus 12 × 0.25% = 4%.

You can’t deduct the penalty on your income tax return.

What the penalty costs on $2,400 owing

Section titled “What the penalty costs on $2,400 owing”
Complete months latePenalty
Less than 1$24.00
1$30.00
2$36.00
3$42.00
6$60.00
12 or more$96.00 (the 4% cap)

The penalty is small. For most small sellers the bigger costs are interest, a demand to file, and having the CRA treat your account as non-compliant.

Interest on overdue GST/HST

Section titled “Interest on overdue GST/HST”

Interest is a separate charge from the penalty, and it is where the CRA interest rate matters.

  • What it applies to: any GST/HST balance on a return that isn’t paid by the due date, any late or short instalment, and any other overdue GST/HST amount.
  • When it starts: the day after the payment deadline. It runs until the day you pay.
  • The rate: the CRA sets the prescribed rate every quarter. For GST/HST it is the basic rate, which follows 90-day Treasury bills and is rounded up to a whole percentage, plus 4 percentage points.
  • Compounding: daily. You pay interest on the interest.
  • No late payment penalty: since 1 April 2007 a late payment costs interest only. The old 6% a year late payment penalty is gone.

The current rate

Section titled “The current rate”
QuarterRate on overdue GST/HST
1 October to 31 December 20267%
1 July to 30 September 20267%
1 April to 30 June 20267%
1 January to 31 March 20267%

For 1 October to 31 December 2026, the CRA pays 3% on refunds it owes a corporation and 5% on refunds it owes anyone else. The overdue rate is what matters if you owe.

These rates are reset every three months. Check the CRA’s prescribed interest rates page for the current quarter. If a debt stays unpaid across a quarter end, expect the rate on the later days to follow the new quarter’s rate.

To get a feel for it, $1,000 left unpaid for 92 days at 7% compounded daily costs about $17.80 in interest. Left for a full year, about $72.50.

Payments of $10,000 or more

Section titled “Payments of $10,000 or more”

Since 1 January 2024, GST/HST payments of $10,000 or more must be made electronically, and you may face a penalty if you could reasonably have paid electronically and didn’t. Most small sellers never reach this, but pay online anyway.

Other penalties that catch sellers

Section titled “Other penalties that catch sellers”

Failing to file electronically

Section titled “Failing to file electronically”

For reporting periods beginning on or after January 1, 2024, almost every GST/HST registrant has to file electronically. If you file on paper when you shouldn’t, the penalty is $100 for the first return and $250 for each return after that. See how to file with NETFILE if you don’t know where to start.

Ignoring a demand to file

Section titled “Ignoring a demand to file”

If the CRA sends you a demand to file and you still don’t file, there is a $250 penalty, and it applies on top of any other penalties. It applies even if you would owe nothing.

Repeat offenders

Section titled “Repeat offenders”

The CRA’s GST/HST penalty page doesn’t set a separate, higher late filing penalty for repeat offences. The formula is the same every time. What does escalate is the electronic filing penalty ($100, then $250) and the CRA’s willingness to cancel penalties on request: a history of filing and paying on time is one of the things it looks at, so a pattern of late returns hurts you there.

Reporting mistakes

Section titled “Reporting mistakes”

If you file electronically and leave out required information or make a false statement on certain lines, a separate penalty of at least 5% and up to 10% can apply. It is aimed at errors on items such as recaptured ITCs, and sellers with ordinary sales and purchases rarely meet it. Fix any mistake with a change request rather than a second return. See fixing a mistake.

If you owe nothing, or you’re due a refund

Section titled “If you owe nothing, or you’re due a refund”

There’s no late filing penalty and no interest if there is nothing to pay. But you still have to file every return, including nil returns. Not filing leaves your account open and non-compliant, can bring a demand to file, and means the CRA doesn’t pay your refund until it has the return. If you’re regularly in a refund position, for example because most of your sales are zero-rated exports to the US, filing monthly or quarterly gets the money back sooner.

Instalment interest and penalties

Section titled “Instalment interest and penalties”

Only annual filers pay instalments, and only if their net tax is $3,000 or more both for last year and for this year. Instalments are due one month after the end of each fiscal quarter. Miss one or pay too little, and the CRA charges instalment interest at the same rate as other overdue GST/HST: the basic rate plus 4 percentage points. It runs from the day after the instalment was due until you pay it, or until the net tax for the year is due, whichever is first.

Two things make this easy to avoid:

  • The safe harbour. If you pay four instalments, each equal to a quarter of last year’s net tax, in full and on time, the CRA doesn’t charge instalment interest, even if this year’s tax turns out much higher.
  • You can catch up. If you realise you underpaid, you can reduce or remove the interest by overpaying your next instalment or paying it early.

See the instalments section of the return guide.

Worked example: a quarterly return filed three months late

Section titled “Worked example: a quarterly return filed three months late”

Cedar & Co. sells housewares from Mississauga, Ontario through Shopify and Etsy. It’s a quarterly filer. For January to March 2026 it collected HST and claimed its input tax credits, and its net tax for the quarter was $2,400.

Reporting periodJanuary 1 to March 31, 2026
Return and payment dueApril 30, 2026
Filed and paidJuly 31, 2026
Complete months late3 (April 30 to July 31)
Overdue GST/HST rate7% in every quarter of 2026

The penalty

  • A: 1% × $2,400 = $24.00
  • B: 25% of A = $6.00 a month
  • C: 3 complete months
  • Penalty: $24.00 + ($6.00 × 3) = $42.00

The interest

Interest runs from May 1 to July 31, which is 92 days. At 7% a year compounded daily, $2,400 grows by a factor of (1 + 0.07 ÷ 365) to the power of 92:

  • $2,400 × [(1 + 0.07 ÷ 365)^92 − 1] = about $42.72

The total

Amount
Tax owing$2,400.00
Late filing penalty$42.00
Interest to July 31about $42.72
Total paid on July 31about $2,484.72

So the lateness cost about $85, which is 3.5% on top of the tax. Had Cedar & Co. filed on time but paid on July 31, it would have paid the interest ($42.72) and no penalty. Had it paid on April 30 and only filed late, the penalty would have been $0, because nothing was unpaid on the filing deadline. Interest is rounded here, and the CRA’s own figure on your statement can differ by a few cents.

Already late? What to do now

Section titled “Already late? What to do now”
  1. File now. Even if you can’t pay. Every extra complete month adds 0.25% to the penalty until the 12-month cap, and an unfiled return can lead to a demand to file and its $250 penalty. File through your CRA business account or NETFILE.
  2. Pay as much as you can. Interest runs on the unpaid balance every day, so each dollar you pay now stops costing you.
  3. Set up a payment arrangement for the rest. Contact the CRA, which can set up an arrangement. Businesses can do this in My Business Account or by calling the CRA’s business line at 1-800-959-5525. The CRA wants future returns filed on time, and arrangements aren’t guaranteed. Interest keeps accruing on what you still owe.
  4. Ask for relief. See the next section.
  5. Fix the cause. Put the deadline in your calendar, check the instalments, or have someone file for you.

Getting penalties and interest cancelled

Section titled “Getting penalties and interest cancelled”

The CRA has the power under section 281.1 of the Excise Tax Act to waive or cancel GST/HST penalties and interest. The limit is 10 calendar years after the end of the reporting period the amounts relate to, so there is usually time even for old periods. It’s discretionary, not a right.

When the CRA says yes

Section titled “When the CRA says yes”

The CRA’s GST/HST guidance lists three main grounds:

GroundExamples the CRA gives
Extraordinary circumstances beyond your controlA natural or human-made disaster such as a flood or fire, a disruption in services such as a postal strike, a serious illness or accident, serious emotional or mental distress such as a death in the immediate family
Actions of the CRAProcessing delays, errors in CRA publications, incorrect written information given to you, delays in providing the information you needed
Inability to pay or financial hardshipWhere relief helps the CRA collect, for example when penalties and interest are a large part of a payment arrangement

It also looks at your record: whether you generally file and pay on time, whether you knowingly let a balance go unpaid, and whether you acted quickly to fix the problem. Simply forgetting, or being busy, isn’t one of the listed grounds.

How to ask

Section titled “How to ask”
  • Online: in My Business Account (or Represent a Client for your accountant), choose Request relief of penalties and interest.
  • By form: send Form RC4288, Request for Taxpayer Relief, with your supporting documents, online with the Submit documents service or by mail.
  • What to include: the reporting periods, a plain account of what happened and when, and documents such as a doctor’s note or insurance letter. If you’re asking because you can’t pay, expect to give full financial details and a meaningful payment arrangement.

If you disagree with the answer, you can ask for a second review. After that, the route is judicial review at the Federal Court, which can send the request back to the CRA but doesn’t make the decision itself. Don’t wait for the answer before you file and pay, because interest keeps running on unpaid tax.

What if you never registered?

Section titled “What if you never registered?”

A seller who passed the $30,000 threshold and never registered has the same exposure, and bigger numbers. The CRA treats you as registered from the date you should have been. You owe the GST/HST on your sales since then, even though you never charged it, and you owe returns for every period, with the late filing penalty and interest on each.

That’s the situation the CRA’s Voluntary Disclosures Program is built for. If you come forward before the CRA contacts you, you can get relief on all of the penalties and most of the interest, though never on the tax. Our voluntary disclosure guide explains who can apply, what the 2025 changes mean, and how it compares with simply registering and filing the missed returns. To register, see how to register for GST/HST.

Quebec businesses

Section titled “Quebec businesses”

Most Quebec businesses file and pay their GST/HST with Revenu Québec on a combined GST/QST return, not with the CRA. Revenu Québec has its own penalty and interest rules for QST. This guide covers the CRA’s rules. See the GST/QST return guide if you’re in Quebec.

Section titled “Related guides”

Official sources

Section titled “Official sources”