a.   Penalties

A corporation which has failed to file a T2 by the required date is open to a late filing penalty.

The penalty for a late filed tax return is the total of:

  i.   5% of the unpaid tax as of the due date of the return (no maximum).

  ii.  1% of the unpaid tax as of the due date of the return for each complete
   month that the return is late (maximum 12%).

Additional penalties may also be assessed if a taxpayer attempts to willfully evade payment of tax by failing to file a return. Penalties may also be levied on persons who knowingly or through gross negligence make false statements or omissions in a return.

b.   Interest on Late Payments

Although the date of the filing is the end of the sixth month period following the fiscal year-end, the final payment is due on the last day of the second month following the taxation year, with a one-month extension in most cases for corporations with taxable income of less than $225,000 in the immediately preceding taxation year.

c.   Interest on Federal Installments

Interest is charged on the deficiency in each instalment from the date when the instalment should have been paid to the date of payment.
Interest on late-paid installments and unpaid balances is charged at a prescribed rate which is set quarterly, currently 7%. Interest is subject to daily compounding.

NOTE: Neither interest charges nor penalties are deductible expenses for income tax purposes.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.
 

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