Catching Up on Unfiled Tax Returns

If you've fallen a few years behind, the cost usually grows the longer it sits. Penalties and interest build on any balance owing, and benefits that depend on a filed return stop coming.

What not filing costs you

• Late-filing penalty. If you file late and owe tax, the penalty is 5% of the balance owing plus 1% for each full month late, up to 12 months. It rises to 10% plus 2% a month, up to 20 months, if the CRA sent you a demand to file that year's return and you were also charged a late-filing penalty for any of the three previous years.
• Interest. Charged on any unpaid balance, compounded daily, starting the day after the due date. The rate can change every three months.
• Benefits. The Canada child benefit and the Canada Groceries and Essentials Benefit (formerly the GST/HST credit) depend on you filing. For the CCB you have to file every year even with no income, and so does your spouse or common-law partner. CCB payments stop if you don't, and CGEB payments can stop for a while when you file late.

The CRA doesn't have to wait for you

Under the Income Tax Act, the CRA can assess your tax for a year even if you never filed a return. It may also contact you about returns you haven't filed, or send a formal demand to file, which is one of the triggers for the bigger repeat penalty above. If the CRA has already assessed a year you never filed and you want that assessment changed, you file a paper return for that year. Changing a return you did file works differently (see our post on changing a filed return).

Filing the missing years

Start by working out which years are missing and pulling together the slips and receipts for each. If you ran a business, the records for those years may need catch-up bookkeeping before the returns can be done.

NETFILE, through certified tax software, takes original returns for 2018 to 2025 this filing season, which runs until January 29, 2027. For earlier years, the CRA keeps past income tax packages online, and those packages are for filing on paper.

The Voluntary Disclosures Program

If the missing years will show tax owing, the VDP can take off the penalties and part of the interest. You still pay the tax. The program changed on October 1, 2025, and now has two levels of relief:

• General relief. Normally for unprompted applications: 100% of the penalties and 75% of the interest.
• Partial relief. Normally for applications prompted by CRA contact, such as an education letter about unreported income: up to 100% of the penalties and 25% of the interest.

The CRA says people prompted by a letter like that are now eligible, and calls the program less restrictive than it used to be.

You have to meet all five conditions. You apply before the CRA has started an audit or investigation of you, or a related taxpayer, about what you're disclosing. You include all the relevant information and documents. The disclosure involves an error or omission that carries interest or penalties. It's at least one year past the filing due date. And you include payment of the estimated tax owing, or ask for a payment arrangement.

Where several years are involved, you generally include the most recent six years for Canadian-source income and ten for foreign income or assets. You apply on Form RC199, online through My Account, by fax or by mail. If you're not sure it fits, you can ask for an anonymous pre-disclosure discussion first. The VDP typically isn't for returns that end in a refund or with no tax or penalties owing. Those years are simply filed.

Getting benefits restarted

Once a late return is assessed, the CRA works out whether you were entitled to the CCB or CGEB for that period and pays anything you missed with the next scheduled payment. Both are recalculated every July using the previous year's information, so the payments running from July 2026 are based on your 2025 return. From then on, filing by April 30 each year avoids another gap. If the returns leave you with a balance you can't pay all at once, the CRA can set up a payment arrangement (our post on dealing with the CRA has more).

How we help

We do catch people up on several years of unfiled returns. Back taxes are more common than people think, and nothing to be embarrassed about. We work out which years are missing, file them in order, and deal with the CRA along the way. If a business's books need catching up as well, catch-up and clean-up of prior years is part of our bookkeeping work.