CRA announced penalty relief for taxpayers

Capital gains inclusion rate deferral and filing difficulties have spurred several relief announcements from the CRA

The delayed implementation of the increase to the capital gains inclusion rate to January 1, 2026, has resulted in several relief announcements by Canada Revenue Agency (CRA), adding to the uncertainty for many taxpayers and tax professionals this year.  

On January 31, 2025, the CRA announced that it would grant relief in respect of late-filing penalties and interest until June 2, 2025, for “impacted T1 Individual filers” and until May 1, 2025, for “impacted T3 Trust filers”.  In a statement published on its website on February 13, 2025, the CRA stated that the penalty and interest relief is “to provide additional time for taxpayers reporting capital gains to meet their tax filing obligations”.    

On February 19, 2025, the CRA announced penalty relief for certain information slips.  Citing “ongoing challenges” faced by some filers, the CRA will waive late-filing penalties for T4, T4A and T5 slips filed by March 7, 2025, even though the deadline remains February 28, 2025.  Similarly, penalty relief applies to T4PS and T5008 slips filed by March 17, 2025, and to T3 slips for “impacted T3 Trust filers” filed by May 1, 2025. The CRA cautions that penalties for filing these returns after the relief period will be calculated based on the original due date.  For example, if the relief period for a return ends March 7, 2025, for a return due February 28, 2025, and a return is filed on March 8, 2025, the CRA will consider the return to be 8 days late.  

CPA Canada has reached out to the CRA to obtain greater clarity on the interest and penalty waiver for impacted T1 and T3 filers.  For example, the CRA does not clarify whether a spouse of an impacted T1 filer, with no capital gains or losses to report, is also an “impacted T1 Individual filer”, or whether the deadline for other prescribed forms that are related to a T1/T3 filing are also extended (e.g., T1135). 

The CRA has told CPA Canada that the previously announced interest and penalty relief for corporations no longer applies, stating: 

As the capital gains rate change is now proposed to be effective January 1, 2026, corporations can continue to use existing forms and tax software to file using the one-half inclusion rate until further notice. Penalty and interest relief was originally announced for those corporations with a filing due date on or before March 3, 2025, to allow time for corporations to work through the new forms which were expected to be published on January 31, 2025. As forms for the T2 Corporation Income Tax Return related to the capital gains inclusion rate are not being revised at this time, there is no longer a basis for providing relief.  

CPA Canada has requested clarification from CRA if this statement means the original penalty relief was rescinded or if the penalty relief no longer applies after the announcement on January 31, 2025. 

To help CPA Canada members navigate these updates, we have outlined the filing due dates for tax returns and tax information slips and the announced waiver of interest and penalties. This information is based on CRA’s statements as of February 26, 2025, and is subject to change. 

Tax returns 

T1 income tax return 

  • Normal due date: April 30, 2025, unless taxpayer (or spouse) carries on business in which case deadline is June 16, 2025. 

  • Relief: No late-filing penalties and arrears interest for “impacted T1 Individual filers” if a return otherwise due April 30, 2025, is filed on or before June 2, 2025 

T2 income tax returns 

  • Normal due date: Six months after year-end 

  • Relief: Relief for arrears interest and penalties for corporations that had a filing due date on or before March 3, 2025 was previously announced on November 14, 2024. Per CRA’s statement above – there is no longer a basis for providing relief. 

T3 income tax return (including taxation years that end between January 1, 2025 and January 31, 2025) 

  • Normal due date: 90 days after the year-end (e.g. March 31, 2025 for a December 31, 2024 year-end) 

  • Relief: No late-filing penalties and arrears interest for “impacted T3 Trust filers” if the return is filed on or before May 1, 2025 

We expect that “impacted T3 trust filers” includes trusts that report dispositions of capital property in any fiscal period ending after June 24, 2024, and before January 1, 2025, though this is unclear in CRA’s announcements. We have requested clarification from CRA and will provide an update when we receive it. 

CRA provided CPA Canada the following statement expanding the concept of “impacted T3 filers”:  

Impacted T3 Trust Filers would also include 2025 T3 tax returns where there is a disposition to be reported and the return has a fiscal period ending between January 1, 2025 and January 31, 2025.

Information returns 

T3 information return (slips) 

  • Normal due date: 90 days after year-end  

  • Relief: For trusts that are “impacted T3 Trust filers” – No late-filing penalties if filed on or before May 1, 2025 

T4 information return (slips) 

  • Normal due date: February 28, 2025 

  • Relief: No late-filing penalties if filed on or before March 7, 2025 

T4A information return (slips) 

  • Normal due date: February 28, 2025 

  • Relief: No late-filing penalties if filed on or before March 7, 2025 

T5 information return (slips) 

  • Normal due date: February 28, 2025 

  • Relief: No late-filing penalties if filed on or before March 7, 2025 

T4PS information return (slips) 

  • Normal due date: February 28, 2025 

  • Relief: No late-filing penalties if filed on or before March 17, 2025 

T5008 information return (slips) 

  • Normal due date: February 28, 2025 

  • Relief: No late-filing penalties if filed on or before March 17, 2025 

Jane Zhao