What happens if income taxes are not paid on time?

If I don’t pay my taxes in time, what’s the penalty?

In the short term there isn’t a fixed penalty, exactly, for not paying on time, but the Canada Revenue Agency (CRA) will start charging you interest on any money you owe. The interest rate may vary a bit depending on your circumstances, but it’s usually 5%.

If you also file your tax return later than the due date (typically April 30th of each year) then you may also be charged a late filing fee. This fee starts at 5% of your balance owing and an extra 1% is charged for each late month.

Years when you do not owe any income tax there there won’t be any additional penalty incurred since you didn’t need to pay anything. However, it’s still a good idea to file the income tax paperwork as doing so opens up eligibility for various benefits (such as GST/HST refunds) and the possibility of gaining an income tax refund in situations where CRA owes you money.