If you’re a business owner and you’ve received a CRA Late Filing Notice, it means the Canada Revenue Agency (CRA) hasn’t received your tax return by the deadline. You might think ignoring it won’t be a big deal, but the consequences can add up quickly—penalties, interest, and even legal action.
So, what happens if you don’t respond? Let’s break it down.
1. Late Filing Penalties Add Up Fast
The first issue with ignoring a late filing notice is the penalty. The CRA charges:
- 5% of the balance owing if your return is late.
- An additional 1% per month (up to 12 months) if you don’t file.
- Higher penalties if you’ve been late in previous years—up to 10% of your balance owing plus 2% per month.
What to Do:
- Even if you can’t pay right away, file your return ASAP to stop penalties from increasing.
- If you have unpaid taxes, look into CRA payment plans to avoid further issues.
2. Interest on Unpaid Taxes Keeps Growing
Ignoring your late filing notice doesn’t make the tax debt disappear. The CRA charges compound daily interest on any unpaid amounts, starting the day after your filing deadline. The longer you wait, the more you owe.
What to Do:
- Pay as much as you can right away to reduce interest charges.
- Contact the CRA if you need a payment arrangement.
3. The CRA Can Freeze Your Business Bank Account
If you continue ignoring your late filing notice, the CRA has the authority to take action against your business. One of the most serious steps they can take is issuing a Requirement to Pay (RTP) order, which allows them to:
- Freeze your business bank account.
- Garnish business income or payments from clients.
- Seize assets if the tax debt remains unpaid.
What to Do:
- Don’t wait for legal action—respond to the CRA before things escalate.
- If your bank account is frozen, seek professional help immediately.
4. You Could Lose Access to Tax Credits and Benefits
If your business qualifies for GST/HST refunds, small business deductions, or other tax benefits, a late filing could result in delayed payments or lost credits. The CRA won’t process refunds until outstanding tax returns are filed.
What to Do:
- File your return even if you’re expecting a refund—you won’t receive it until your taxes are up to date.
- Keep track of tax deadlines to avoid missing out on business benefits.
5. Your Business Credit and Reputation Can Be Affected
The CRA reports unpaid tax debts to credit bureaus, which can hurt your business’s ability to:
- Secure loans or lines of credit.
- Get financing for growth.
- Maintain trust with suppliers and partners.
What to Do:
- Avoid damage to your business credit by staying compliant with CRA deadlines.
- If you’re struggling to pay, explore options like CRA Voluntary Disclosure to reduce penalties.
Key Takeaways
- Ignoring a CRA Late Filing Notice leads to penalties and growing interest.
- The CRA can freeze your business bank account or seize assets if you don’t respond.
- Late filings may delay tax refunds, credits, and other business benefits.
- Unpaid tax debt can hurt your business credit and financial future.
- Filing your return—even if you can’t pay in full—can prevent further penalties.
Got a late filing notice? Contact us today—we’ll help you file, minimize penalties, and get back on track.
