Catch-Up Bookkeeping and CRA Penalty Cost Calculator
Years behind on books, HST and T2s. Work out the cleanup fee per year, the realistic timeline in weeks, and the order the work has to happen in, because doing it out of sequence is what makes it expensive.
all-in cleanup fee
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The Cleanup Fee
| Item | Basis | Amount |
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The Order the Work Has to Happen In
| Step | Why It Comes Here | Weeks |
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Estimated CRA Exposure
| Item | Basis | Amount |
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Points That Decide This
What to Do Next
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Disclaimer: Professional fees shown are indicative fixed fees including HST for planning purposes, and are confirmed in writing before any engagement begins. Actual fees depend on the condition of the records and the scope agreed. The corporate late-filing penalty under subsection 162(1) is 5% of the unpaid tax at the filing due date plus 1% of that unpaid tax for each complete month the return is late, to a maximum of 12 months, with higher rates under subsection 162(2) where a demand to file was issued and a late-filing penalty was assessed in any of the three preceding years. The GST/HST failure to file penalty under section 280.1 is 1% of the amount owing plus 0.25% of that amount for each complete month the return is outstanding, to a maximum of 12 months. Arrears interest is modelled at 8% compounded daily. Amounts withheld from employees as source deductions are held in trust for the Crown, attract a failure to remit penalty of 10% rising to 20% for a repeated or knowing failure, and expose directors to personal liability under section 227.1 of the Income Tax Act. A voluntary disclosure can provide penalty relief and partial interest relief where the CRA has not yet contacted the taxpayer about the matter, and that route generally closes once enforcement action has begun. Penalty figures on this page are indicative summaries for scoping purposes; detailed penalty calculations are set out on the dedicated penalty calculators linked below. This page is general information, not tax advice, and is not a quote.
The Sequence Is the Whole Job
Most of the cost in a catch-up file comes from doing things in the wrong order. Books, then HST, then T2, then the disclosure. Each step depends on the one before it, and skipping ahead means doing work twice.
- Books first, because every other number comes out of them
- HST next, because the returns are built from the completed books and the credits need supporting
- T2s after that, because they need the finished HST position and the year end figures
- Disclosure last, submitted with the returns rather than as a promise to file them
Filing a T2 before the bookkeeping is done means filing a number you will have to amend. Owners under pressure often want the return in first to stop the letters. It does not stop the letters, and it creates an amended return, a second set of fees and a worse conversation with the CRA.
Payroll Source Deductions Jump the Queue
If there are unremitted source deductions, the sequence changes. Money withheld from employees is held in trust for the Crown, and it is treated far more seriously than late tax or late HST.
Directors are personally liable for it under section 227.1, that liability survives the corporation, and the CRA’s collection posture on trust funds is materially more aggressive than on ordinary arrears.
Unremitted source deductions come before everything else, including the bookkeeping. That balance should be quantified and addressed in the first week, not at the end of a three month cleanup.
What Actually Drives the Fee
It is not the number of years. It is the condition of the records, and the range between clean and chaotic is roughly double.
| Condition | What It Means | Effect on Fee |
|---|---|---|
| Clean bank feeds and receipts | Transactions import, most have documentation | Baseline |
| Bank feeds, some receipts | Transactions import, documentation is patchy | Around 30% more |
| A shoebox, or nothing | Statements to be obtained, everything reconstructed | Around 60% more |
Bank statements can be downloaded, and doing that before the engagement starts saves real money. Most institutions hold seven years online. Pulling every statement and credit card record into one folder is a weekend of work that meaningfully reduces the fee.
Come Forward Before They Do
A voluntary disclosure can remove penalties entirely and provide partial interest relief, and on a multi-year catch-up the penalties are usually a large share of the exposure.
The route closes once the CRA contacts you about the matter. A demand to file is contact. An arbitrary assessment is well past it. The window is open precisely while nothing appears to be happening, which is exactly when owners feel least urgency.
| Where You Are | Disclosure |
|---|---|
| No contact from the CRA | Available. Move now. |
| A demand to file has arrived | Likely closed for those periods |
| Arbitrary assessments issued | Closed. Different route entirely. |
How Long It Genuinely Takes
Owners expect weeks and the honest answer is usually longer, because the constraint is rarely the accounting. It is waiting for bank statements, chasing missing documentation, and the CRA’s own processing times on the filings once submitted.
A three year catch-up on decent records is a matter of weeks. The same three years from a shoebox, with statements to be requested from a closed bank account, runs considerably longer, and no amount of paying extra compresses the parts that involve waiting for third parties.
Why Doing Nothing Is the Expensive Option
- Interest compounds daily on everything owing, throughout
- The disclosure window closes the moment the CRA makes contact
- Arbitrary assessments arrive based on the CRA’s estimate rather than your actual figures
- Input tax credits expire four years after the return in which they could first have been claimed
- Unfiled years never become statute-barred, so they stay open indefinitely
- Refunds expire three years after the year end, and some catch-up files are owed money
Some catch-up files end up as refunds. Where instalments were paid, credits were earned or losses arose, the corporation may be owed money rather than owing it. That is a real outcome and it is another reason the delay costs rather than saves.
What This Calculator Does Not Cover
- Detailed penalty computation, which is on the dedicated calculators linked below
- Director liability for trust funds, which is assessed separately
- The disclosure application itself and whether it will be accepted
- Payment arrangements with collections
- Whether the corporation should continue at all
- Provinces other than Ontario
Books, then HST, then T2, then disclosure. Our catch-up bookkeeping service runs the whole sequence as one engagement with one fixed fee.
Frequently Asked Questions
Common questions on catching up years of bookkeeping.
Related Calculators and Guides
The detailed penalty and deadline tools.
One Engagement, One Fixed Fee, Right Sequence
Send us the years outstanding and tell us honestly what state the records are in. We will quote the whole cleanup as one fixed fee including HST, run it in the right order, and deal with the CRA throughout.