Behind on taxes in Canada: what to do first (even if it’s multiple years)

Behind on taxes in Canada: what to do first (even if it’s multiple years)

Being behind is fixable. The trick is doing it in the right order so you don't create extra work.

Step 1: Get a clean list of what’s missing

Write down:

• Which tax years are unfiled

• Whether you had employment income (T4), self-employment income, or both

• Whether you also have GST/HST or payroll filings outstanding

Step 2: Gather “minimum viable” documents

You do not need perfection to begin. You need enough to file accurately.

For employees:

• Tax slips you have (T4, T4A, etc.)

• RRSP contribution slips

• Tuition, childcare, medical, and donation receipts if applicable

For business owners:

• Bank statements for each year (all accounts used)

• Sales summaries (Square, Stripe, Shopify, e-transfer logs)

• Big expense categories (vehicle, supplies, subcontractors)

• Any GST/HST returns already filed (if applicable)

Step 3: File in a logical order

For multi-year catch-up, a practical approach is usually oldest-to-newest so carry-forwards and balances line up. (The exact order can vary if CRA has issued a demand to file or if a specific year is driving a review.)

Step 4: Understand penalties and interest (so you can make decisions)

If you owe money and file late, CRA’s late-filing penalty is generally 5% of the balance owing plus 1% per month late up to 12 months, with higher penalties for repeat situations under certain conditions.

Step 5: Put a “never again” system in place

Most people fall behind because the system depends on motivation. Better systems depend on routine:

• Monthly receipt capture

• One bookkeeping workflow (not “whatever the bank feed says”)

• Quarterly GST/HST check-ins if you are registered

• One place for documents and CRA letters

• A dedicated personal tax professional (like BWB) to help keep you on track year after year