How does CRA calculate and apply the late filing penalties for personal tax situations?
The penalties applied by Canada Revenue Agency on late personal tax filings is based on the following events: First Letter (TX11) The first CRA letter (called a TX11) is sent out by computer to a taxpayer who is late in filing his personal tax return. A normal penalty of 5%, plus 1% per month up to a maximum 12 months (maximum 17% penalty) of taxes owing is levied. Regardless of the TX11 being sent, this penalty automatically applies whenever a taxpayer is late in filing. Second Letter (TX14) The 2nd letter sent is called a TX 14 demand letter. The enhanced penalty of 10% plus 2% per month up to 20 months (i.e.40%) of taxes owing could be applied. (Potential tax penalty of 50%) This enhanced penalty applies if taxes were owing in the current year and you filed late in 1 of the 3 prior years(and owed taxes in that late filed year). Third Letter (TX14D) The 3rd letter is sent by registered mail or delivered personally. This letter is issued, in accordance with section 150(1) of the Incom
