Incorporation and Avoiding Late Penalties: Your Guide to a Smooth Start

Corporations Business Tax


Incorporating your business is a pivotal step towards establishing a strong legal identity and enjoying various financial benefits. At, we’re committed to helping you set up your incorporation efficiently, all at an affordable price of $375* plus applicable taxes. This package includes all government fees, ensuring you start your business journey on the right foot. In this article, we’ll also shed light on the potential penalties for late filing, providing real-world examples with dollar values to help you steer clear of financial pitfalls.

Late Filing Penalties: A Costly Oversight

Filing your business’s tax return late can lead to significant financial penalties. The Canada Revenue Agency (CRA) imposes these penalties to encourage timely compliance with tax obligations. Here’s a breakdown of the penalties you might face:
  1. Late Filing Penalty (General Corporations)
    • If you file your return late, a penalty applies.
    • The penalty comprises 5% of the unpaid tax due on the filing deadline, plus an additional 1% for each complete month that the return is overdue, up to a maximum of 12 months.
    • For example, if your unpaid tax is $10,000 and your return is five months late, the penalty would be $10,000 (5% initial penalty) + $5,000 (1% per month for 5 months) = $15,000 in penalties.
    • An even higher penalty, 10% of the unpaid tax due when the return was originally due, plus 2% per month for each complete month it’s late, applies if the CRA issued a demand to file the return under subsection 150(2) or if they assessed a failure to file penalty in any of the three previous tax years.
  2. Late Filing Penalty (Non-Resident Corporations)
    • Non-resident corporations face a failure-to-file penalty, which is the greater of:
      • $100, or
      • $25 for each complete day the return is late, up to a maximum of 100 days.
    • This penalty applies if it exceeds the penalties typically applied under subsections 162(1) and 162(2).
    • For instance, if your non-resident corporation’s return is 15 days late, the penalty would be $375 ($25 per day for 15 days), potentially higher than the standard penalties.


Incorporating your business with not only streamlines the process but also safeguards you from the financial pitfalls of late filing penalties. Remember that late penalties can add up quickly, impacting your bottom line. Our affordable incorporation package at $375* plus applicable taxes, covering all government fees, ensures a smooth start to your business journey. Don’t risk costly penalties; choose the smarter path to incorporation with Tax4Less today. *Applicable taxes not included in the $375 incorporation fee.

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Corporations Business Tax

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