Unfiled T2 Catch-Up Cost Calculator
Years behind on corporate returns. Work out the tax, penalty and interest accruing on each year, what a voluntary disclosure would save, the professional fee to file everything, and the order to do it in.
owing to the CRA today
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What Is Owing
| Item | Basis | Amount |
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Year by Year
| Return Due | Months Late | Tax | Penalty | Interest |
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What a Voluntary Disclosure Changes
| Relief | Your Position | Amount |
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Our Fee to Bring You Current
| Work | Basis | Fee |
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Points That Decide This
What to Do Next
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Disclaimer: The late filing penalty under subsection 162(1) is 5% of the unpaid tax plus 1% per complete month to a maximum of twelve, giving a ceiling of 17%. Where a demand to file was issued and a late filing penalty was assessed in any of the three preceding tax years, subsection 162(2) applies at 10% plus 2% per month to a maximum of twenty, giving a ceiling of 50%. Interest runs at the prescribed rate plus 4%, compounded daily, from the balance due date. Corporate tax is calculated at the Ontario combined small business rate of 11.2%, reflecting Ontario’s reduction of its rate to 2.2% effective 1 July 2026, and at 26.5% above the $500,000 limit. Relief under the Voluntary Disclosures Program is discretionary and requires the application to be voluntary, complete, involve a penalty, and include information at least one year overdue. Unprompted applications receive full penalty relief and 75% interest relief, prompted applications receive full penalty relief and 25% interest relief, and an application is not accepted where the CRA has already commenced enforcement action. This page is general information, not tax advice.
The One Question That Decides Everything
Whether the CRA has contacted you yet is worth more than every other input on this page combined. It determines whether relief under the Voluntary Disclosures Program is available in full, reduced, or gone entirely.
| Your Position | Penalty Relief | Interest Relief |
|---|---|---|
| No CRA contact, you come forward | Full | 75% |
| A demand to file has arrived | Full, but treated as prompted | 25% |
| Enforcement action already commenced | None | None |
On five years at $120,000 of income a year, coming forward before contact saves about $25,900. After a demand that falls to about $16,200, and after an arbitrary assessment it is nil. The value of acting is measured in weeks, not years.
The Penalty Triples on a Second Offence
The ordinary late filing penalty is 5% of the unpaid tax plus 1% for each complete month, capped at twelve months. That gives a ceiling of 17%.
Where the CRA issued a demand to file and a late filing penalty was already assessed in any of the three preceding years, the repeated failure penalty applies instead at 10% plus 2% per month to twenty months. The ceiling becomes 50%.
| Penalty | Rate | Ceiling |
|---|---|---|
| Ordinary late filing | 5% plus 1% per month to twelve | 17% of the unpaid tax |
| Repeated failure | 10% plus 2% per month to twenty | 50% of the unpaid tax |
Interest Is the Part That Keeps Growing
The penalty stops at twelve months, or twenty on a repeated failure. Interest never stops, compounds daily at the prescribed rate plus four percent, and on a file several years old it becomes the larger number.
On five unfiled years it is roughly $19,300 against a penalty of about $11,400. On seven years it is $35,300 against $16,000. Anyone watching the penalty is watching the wrong number.
An Arbitrary Assessment Is Not the End
The CRA can assess without a return under subsection 152(7), estimating income from whatever information it holds. Those assessments are usually far higher than the real liability, because the CRA has no record of your expenses.
Filing the actual return replaces the arbitrary assessment. What is lost is the disclosure relief, not the ability to file. A corporation sitting on an arbitrary assessment should still file, because the tax comes down even though the penalties do not.
Do not ignore an arbitrary assessment because the number looks impossible. Collection action proceeds on the assessed amount whether or not it is right. Bank garnishment does not wait for you to prove the figure was wrong.
Losses Do Not Mean No Consequences
Where the unfiled years were losses, the penalty and interest are both nil, because each is calculated on unpaid tax. That is genuinely reassuring and it is why the calculator returns zero on loss years.
What is not nil is the loss itself. Non-capital losses have to be reported to be carried forward, and a loss sitting in an unfiled year cannot be applied against a profitable year until the return goes in. Corporations frequently discover this when they finally have a good year and find the shelter they expected is not available.
The Order to File In
- Decide on the disclosure first, because the application has to go in before the returns and before any further CRA contact.
- Rebuild the bookkeeping oldest year first, since each year’s closing balances feed the next.
- File all years together rather than one at a time, which the disclosure programme requires in any event.
- Deal with HST and payroll at the same time, because they are almost always outstanding for the same years and a disclosure should cover everything.
- Then negotiate the payment arrangement, which the CRA agrees routinely once returns are in.
A Disclosure Has to Be Complete
The programme requires the application to be voluntary, complete, involve the application of a penalty, and include information at least one year overdue. Complete means everything, not the years you would prefer to disclose.
A partial disclosure that omits the HST or the payroll can be rejected outright, and the CRA then has everything you gave it with none of the relief. That is why the scoping conversation matters more than the filing itself.
What This Calculator Does Not Cover
- Varying income between years, since the same figure is applied to each
- Instalment interest, which is charged separately
- Unfiled HST and payroll, which carry their own penalties and are usually outstanding too
- Gross negligence penalties where income was knowingly understated
- Director liability for source deductions and net HST
- Provinces other than Ontario
The relief disappears the day the CRA writes to you. Everything else on this page can wait a month. That cannot. Our catch-up corporate tax filing service covers the scoping, the disclosure and every outstanding return.
Frequently Asked Questions
Common questions from corporations years behind.
Related Calculators and Guides
More tools for corporations behind on filings.
The Relief Disappears the Day the CRA Writes to You
Send us the business number and whatever records exist. We scope every outstanding filing, prepare the disclosure application before anything else moves, and file all the years together.