What is the penalty for filing a GST/HST return late?
The GST/HST late filing penalty is 1% of the net tax unpaid at the due date, plus 0.25% of that amount per complete month late, up to 12 months, a 4% cap. As of October 2026 it applies only when your client owes: a nil or refund return draws none. Unpaid tax also draws 7% interest, compounded daily.
What the late filing penalty costs, month by month
The CRA writes the penalty as A + (B × 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, to a maximum of 12 canada.ca. In plain terms, 1% on day one, then another 0.25% for each full month, so the penalty never passes 4%.
| Complete months late | Penalty rate | Penalty on $10,000 unpaid |
|---|---|---|
| Less than 1 | 1% | $100 |
| 1 | 1.25% | $125 |
| 2 | 1.5% | $150 |
| 3 | 1.75% | $175 |
| 6 | 2.5% | $250 |
| 9 | 3.25% | $325 |
| 12 or more | 4% | $400 |
The 12 month cap is in the statute. ETA 280.1(b) multiplies a quarter of the 1% amount by the number of complete months, not exceeding 12, from the filing due date to the day the return is filed laws-lois.justice.gc.ca. A return filed 29 days late pays the same 1% as one filed a day late.
Which amount is the 1% charged on?
ETA 280.1(a) charges 1% of the amounts required to be remitted or paid for the reporting period that were not remitted or paid on or before the day the return was due laws-lois.justice.gc.ca. The base is the unpaid balance on the due date, not the net tax on the return.
That has three practical results for your client:
| Situation at the filing due date | Late filing penalty |
|---|---|
| Net tax paid in full, return filed late | None, nothing was unpaid on the due date |
| Part of the net tax paid, return filed late | Charged only on the unpaid part |
| Nil return or refund return filed late | None |
| Nothing paid, return filed late | Charged on the full net tax |
The CRA page says the same thing from the other side: it won't charge the penalty when your client has $0 owing or the CRA owes them a refund canada.ca. Paying after the due date doesn't shrink the base. Once the due date passes with tax unpaid, that unpaid amount is what the 1% and the monthly 0.25% are measured on.
A quarterly return filed five months late owes a $270 penalty on $12,000
A quarterly filer owes $12,000 of net tax for the quarter ending June 30, 2026. The return and payment were due July 31, 2026, one month after the quarter canada.ca. Your client pays nothing and files the return, with full payment, on Friday, January 15, 2027. That's five complete months after the due date.
| Piece | Arithmetic | Amount |
|---|---|---|
| A: 1% of the unpaid amount | $12,000 × 1% | $120 |
| B: 25% of A | $120 × 25% | $30 |
| C: complete months late | July 31, 2026 to January 15, 2027 | 5 |
| Penalty: A + (B × C) | $120 + ($30 × 5) | $270 |
Interest runs separately. ETA 280(1) charges interest at the prescribed rate from the day after the amount was due until it's paid laws-lois.justice.gc.ca, and the CRA compounds it daily
canada.ca. The overdue GST/HST rate is 7% for July 1 to September 30, 2026
canada.ca and 7% for October 1 to December 31, 2026
canada.ca.
From August 1 to December 31, 2026 is 153 days. At 7% compounded daily, $12,000 grows by about $357.29 of interest in that time (simple interest would be $352.11). The January 2027 days use the first quarter 2027 rate, which isn't published as of October 2026. So by mid January your client owes the $12,000, the $270 penalty, roughly $390 of interest on the tax and about $9 of interest on the penalty, which also runs from August 1. Treat the interest as an estimate; the CRA statement is the figure that counts.
Other penalties that can stack on a late return
The late filing penalty is only the start when a file has gone quiet. The CRA can send a demand to file under ETA 282, setting a reasonable deadline for the return laws-lois.justice.gc.ca. Missing that deadline costs a flat $250 under ETA 283
laws-lois.justice.gc.ca, in addition to the other penalties
canada.ca.
| Penalty | Amount | When it applies |
|---|---|---|
| Late filing (ETA 280.1) | 1% plus 0.25% per complete month, 4% maximum | Return filed after the due date with tax unpaid |
| Failure to answer a demand (ETA 283) | $250 | Return not filed by the deadline in a CRA demand |
| Not filing electronically when required | $100 the first time, $250 for each return after that | Paper return from a registrant required to file electronically |
| Inaccurate reporting on an electronic return | 5% of the incorrect amount plus 1% per month of the difference, generally 5% to 10% | Wrong amounts on the return |
| Arrears interest | 7% as of October 2026, compounded daily | Any balance paid after its due date |
The paper filing penalty catches catch up work. Every registrant except charities and selected listed financial institutions must file electronically for periods ending in 2024 and later canada.ca, so a stack of late returns mailed in at once can draw $100 on the first and $250 on each of the rest
canada.ca. None of these penalties is deductible for income tax
canada.ca.
Nil returns, sole proprietors and refund returns change the math
Nil returns are still due. A return is required for every reporting period, including periods with no transactions, no net tax to remit, or the final period when an account closes canada.ca. A late nil return draws no late filing penalty because nothing is owing, but it can still draw the $250 demand penalty if the CRA has to ask for it
laws-lois.justice.gc.ca.
A sole proprietor with a December 31 year end and business income pays by April 30 and files by June 15 canada.ca. Interest starts on May 1 for anything unpaid
laws-lois.justice.gc.ca. The late filing penalty only starts if the return misses June 15, and it's measured on what was still unpaid on June 15
laws-lois.justice.gc.ca.
A late refund return costs your client time instead of money. Refund interest only starts on the latest of 30 days after the return claiming it is filed, 31 days after the period ends, or the date of the payment that created the overpayment canada.ca. File late and those 30 days start late too.
Due dates themselves, including the weekend rule, are on the GST filing deadline page. If a filed return was wrong rather than late, see amending a GST/HST return.
Can the CRA cancel a GST/HST late filing penalty?
Yes. ETA 281.1 lets the CRA waive or cancel the 280.1 penalty, and interest under section 280, on request made within 10 calendar years after the end of the reporting period laws-lois.justice.gc.ca. The grounds are extraordinary circumstances (a flood or fire, serious illness), actions of the CRA, inability to pay (interest only), and other circumstances, and meeting them doesn't guarantee relief
canada.ca.
Errors or delays by a representative are generally your client's responsibility, though the CRA says it may consider exceptional situations canada.ca. Form, evidence and processing are on the taxpayer relief RC4288 page. For unfiled periods the CRA hasn't contacted your client about yet, compare the Voluntary Disclosures Program.
Sources
Is there a late filing penalty if my client paid on time but filed late?
No. ETA 280.1 measures the penalty on amounts not remitted or paid by the filing due date, so tax paid in full by then leaves nothing to penalize laws-lois.justice.gc.ca. File the return anyway: a demand to file still carries its own $250 penalty.
Is the GST/HST late filing penalty the same as the income tax one?
No. The GST/HST penalty is 1% plus 0.25% a month to a 4% maximum, which is far lighter than the income tax version. For corporate returns, see the T2 late filing penalty.
Does interest run on the late filing penalty too?
Yes. ETA 280(1) charges interest on any amount not paid when required under Part IX laws-lois.justice.gc.ca, and the CRA's info sheet GI-024 works an example where interest runs on the failure to file penalty, together with the unpaid net tax, from the day after the return was due until both are paid
canada.ca. The rate is 7% as of October 2026, compounded daily
canada.ca. The rate history is on the CRA interest rate on overdue taxes page.
Can my client deduct the penalty for income tax?
No. The CRA says no income tax deduction is allowed for any penalty paid or payable for failing to correctly file a GST/HST return canada.ca. Interest on the overdue tax is a separate question.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.