Understanding Your CRA Notice of Assessment
After filing your tax return, CRA sends you a Notice of Assessment (NOA). Think of it as your tax report card—it confirms your filing and contains important information you'll need.
- CRA charges daily compound interest on unpaid taxes
- Interest rates can fluctuate based on CRA's prescribed rate
- Late filing penalties add 5% plus 1% per month (up to 12%)
- Repeat offenders face doubled penalties
How Interest is Calculated
CRA charges interest on unpaid taxes starting from the deadline. This interest compounds daily, which means the longer you wait, the faster your debt grows.
Current Interest Rates
CRA updates interest rates quarterly based on the Bank of Canada's target rate. The rate varies for different types of amounts:
- Tax payments you owe CRA
- Refunds CRA owes you (lower rate)
- Installment payments
Late Filing Penalties
5% of balance owing + 1% for each full month late (max 12 months)
10% of balance owing + 2% for each full month late (max 20 months)
If you were charged a late-filing penalty in any of the three preceding years, the repeated failure penalty applies—which is double the standard rate!
How to Avoid Penalties
- File on time, even if you can't pay the full amount
- Pay as much as you can by the deadline
- Set up a payment arrangement with CRA if needed
- Consider Taxpayer Relief Program for exceptional circumstances
Behind on Your Taxes?
Tax Punjabi can help you catch up and minimize penalties and interest.