CRA Penalties And Interest 2025

Every year, thousands of Canadians lose millions of dollars to CRA penalties and interest simply because they file late, underreport income, or make unintentional errors. In 2025, the CRA’s systems automatically apply daily compounding interest on unpaid balances, and even honest mistakes are penalized. With new AI-based cross-verification between CRA, Revenu Québec, and financial institutions, missing a slip or filing late is no longer overlooked—it’s instantly detected.

Penalties and interest don’t just drain your bank account; they damage your financial credibility. The longer you wait, the more expensive it becomes. Fortunately, there are legal ways to reduce, reverse, or eliminate these charges—if you act quickly and strategically.

At Mackisen CPA Auditors Montreal, we specialize in helping individuals and businesses resolve CRA and Revenu Québec penalties. Our experts review your case, challenge unfair assessments, and file relief applications under the Taxpayer Relief Program. We fight to protect your money, your record, and your peace of mind.

Legal and Regulatory Framework

Income Tax Act (Canada)
Section 161(1): Imposes daily compounding interest on unpaid taxes.
Section 162(1): Applies a late-filing penalty of 5% of the balance owing, plus 1% per month (up to 12 months).
Section 162(2): Doubles penalties for repeat late-filers (10% + 2% per month).
Section 163(2): Imposes a 50% gross-negligence penalty on false statements or omissions.
Section 220(3.1): Grants CRA discretion to cancel or waive penalties and interest under the Taxpayer Relief Program.

Tax Administration Act (Quebec)
Revenu Québec applies similar interest and penalty structures and allows for provincial relief applications under exceptional circumstances.

Mackisen prepares, defends, and submits all relief applications, ensuring your case meets CRA and Revenu Québec’s stringent eligibility criteria.

Key Court Decisions

Guindon v. Canada (2015): CRA penalties are legally enforceable even for unintentional errors if deemed careless or negligent.
Venne v. The Queen (1984): Ignorance of filing obligations does not excuse penalties.
Jordan v. The Queen (2009): Interest accrues automatically and cannot be reduced unless relief is granted by CRA.

These cases demonstrate that penalties are automatic—but they are not permanent. Professional representation can make the difference between full liability and full relief.

Why CRA Penalties and Interest Matter

CRA and Revenu Québec penalties are more than just numbers—they are legal claims against your income, benefits, and assets. Left unresolved, they can lead to:

• Frozen bank accounts and garnished wages.

• Seizure of refunds or tax credits.

• Lost eligibility for government benefits and payment plans.

• Significant financial stress and credit impact.

Most Common CRA Penalties in 2025:

1. Late filing or non-filing of returns.

2. Repeated failure to report income (10% penalty).

3. False statements or negligence (50% of underreported tax).

4. Late remittance of payroll or GST/HST.

5. Information return penalties (e.g., missing T1135, T4, T5 forms).

Interest is charged daily, compounded, and continues even while you negotiate or appeal—unless you file for relief.

Mackisen’s Penalty Reduction and Relief Strategy

1. Penalty Diagnosis: Review your full CRA and Revenu Québec account to identify applicable penalties and interest.

2. Error Verification: Confirm whether penalties were applied correctly under the law.

3. Taxpayer Relief Application: File a detailed request citing exceptional circumstances (illness, CRA error, financial hardship).

4. Negotiation and Compliance Plan: Work with CRA agents to establish payment arrangements while relief is pending.

5. Preventive Filing System: Implement systems to prevent future penalties and maintain compliance.

Our strategy delivers results: Mackisen clients have successfully reduced or eliminated penalties through expertly crafted applications and full documentation.

Real Client Experience

A Montreal consultant missed two years of tax filings due to illness and was charged $14,200 in penalties and interest. Mackisen filed a Taxpayer Relief request supported by medical evidence and achieved a 100% waiver.
A small business owner faced payroll remittance penalties of $28,000. Mackisen reviewed the case, proved CRA’s system error, and secured full cancellation within 60 days.

Common Questions

Can CRA remove penalties? Yes, under the Taxpayer Relief Program for valid reasons such as illness, financial hardship, or CRA error.
Do I have to pay before filing for relief? You should pay what you can—interest continues to accumulate until CRA grants relief.
What if I’m penalized by both CRA and Revenu Québec? Mackisen files relief requests with both agencies simultaneously for full coordination.
How long does relief take? It varies from 3–12 months, depending on CRA workload and evidence provided.

Why Mackisen

At Mackisen CPA Auditors Montreal, we understand how overwhelming CRA penalties can be—but we also know how to fight them. Our team combines deep knowledge of tax law with strategic negotiation to get real results. We don’t make excuses—we make relief happen.

We handle every case with professionalism, compassion, and relentless attention to detail. Because at Mackisen, we believe no taxpayer should suffer for a mistake that can be fixed.

Call Mackisen CPA Auditors Montreal today for your 2025 CRA Penalty and Interest Relief Consultation. The first consultation is free, and your protection begins immediately.