As higher interest rates bring up the cost of financing, one tax expert thinks Canadians might be more diligent about paying their tax bills or installments to the Canada Revenue Agency (CRA) this tax season.

The deadline for most Canadians to file their tax return is May 1, 2023, according to the CRA. However, self-employed individuals will have until June 15, 2023 to file. 

“If you file on time but you cannot pay your balance by the balance due date, you'll be subject to interest. Interest right now is being charged at eight per cent,” Jeremy Martenstyn, a chartered professional accountant and tax partner at BDO Canada, said in a phone interview with BNN Bloomberg Monday. 

“What has changed quite a bit over the last year is the cost of financing and obviously the rate that the CRA is charging as well.”

During the last year’s tax season, Martenstyn said the rate people were charged on overdue taxes was around four per cent, which has now doubled for the 2023 tax season. 

“I think people are being a little bit more thoughtful about trying to pay tax bills and installments on time to avoid the really high-interest rates from CRA,” Martenstyn said. 

Even if you cannot pay your taxes by the due date, it's still crucial to file with the CRA, according to Martenstyn. 

“If you do not file on time, you’ll be looking at a penalty for a late filing, which is five per cent of the balance owing, plus one per cent for each full month that you're late up to a maximum of 12 months. So that can get to be pretty steep,” Martenstyn said. 

As of May 1, 2023, the CRA said it will charge daily compound interest to those who owe a balance for 2022 and are unable to pay it by the April 30, 2023 deadline. The agency said this would also include a balance owed if your return has been reassessed. 

If the CRA charged an individual for a late filing in 2019, 2020 or 2021 and requested a formal demand for a return, the 2022 late-filing penalty will be 10 per cent of the balance owed. Additionally, individuals in this instance would be charged an extra two per cent for each month after the due date that they file, up to a maximum of 20 months. 

Scott Plaskett, a certified financial planner and chief executive officer at Ironshield Financial Planning, said in a phone interview with BNN Bloomberg Monday that concerns about missing the tax deadline are more common among self-employed individuals or people not on a typical payroll system. In a payroll system, he said taxes are commonly paid on behalf of the employee.

Plaskett said that as a financial planner, he doesn’t typically see clients who are worried about meeting the CRA deadline.

Plaskett said reaching a payment arrangement with the CRA is the last resort for those unable to meet the deadline.

“[The] interest rate now with CRA, the prescribed rate that you're paying is eight per cent, which is significant when it all comes down to it. So it could be just sort of creating a bigger problem by going down that path,” Plaskett said.

“The thing we have to remember is that it's eight per cent but it compounds on a daily basis.”


In order to pay for unexpected expenses, which might include paying taxes to the CRA, Plaskett said he recommends having an emergency fund in place. He said emergency funds have been less common in lower interest rate environments. 

“Historically, interest rates have been very low. So people have been really reluctant to put money aside and not earn anything,” Plaskett said. 

He said putting an emergency fund in place allows people to “sidestep any of these unforeseen events that get thrown our way.”


Bruce Ball, the vice-president of tax at CPA Canada, said in an email statement to BNN Bloomberg Monday that it is “important to determine why tax is owing” in order to determine whether it could be an issue that arises again next year. 

“The usual cause is having a source of income that is not subject to tax withheld at source. Also, having more than one job can also result in not enough tax being withheld to cover the final balance. If you determine why tax is owing this year, you can also see if you will be in a similar position next year,” he said. 

Ball said that if you expect to be in a similar position the following year, it might be a good idea to allocate a portion of your income to pay next year’s tax. 

Natalija Andronikova, a senior tax expert with TurboTax Canada, said in a statement to BNN Bloomberg Monday that it is important to make the necessary small changes that will allow people to meet the CRA deadline to avoid late fees. 

“This often comes down to small organizational changes like scheduling payments, keeping track of your payment history and knowing the tax deadlines in advance,” Andronikova said. 


There are three reasons the CRA may grant administrative relief from penalties and interest, according to Martenstyn. 

The first reason would be an extraordinary circumstance, he said, which could include things like a natural disaster or the onset of a pandemic. 

“The second way is through actions of the CRA. So for example, if the CRA makes a mistake or they somehow cause your returns to be delayed, taxpayers will not be held responsible for that provided that they apply for relief,” Martenstyn said. 

The third reason would be an inability to pay or a financial hardship, which is a “little bit more subjective,” he said.