CRA Changes Policy to “Paying on Time” – More Interest/Penalties?

The Canada Revenue Agency (CRA) has quietly changed the way it determines when payments are considered received, which has significant implications for individuals and businesses that make payments by cheque. Previously, a payment was considered made by the CRA the day it was processed by a Canadian financial institution or the day that it was postmarked. As of January 7, 2021, the CRA considers a payment made on the day that is processed at any Canadian financial institution or it is received by the CRA.

This change is substantial for those who make payments by cheque, as any payment received following its due date may be charged penalties and/or interest. Prior to this change, a cheque to pay a personal income tax liability mailed on April 29th and received on May 5th would be considered by the CRA to be received on time. Under the CRA’s revised administrative position, that same cheque mailed on April 29th and received on May 5th would be considered late and five days of interest would be applicable in addition to possible penalties. Payments that are due on a weekend or a public holiday recognized by the CRA are considered received on time if it is received the first business day after the due date.

These administrative changes are only applicable to payments. A tax return postmarked before the deadline will not be considered late. More information concerning the CRA’s payment processing can be found here.

If you have any questions about making payments to the CRA, please reach out to us here.