Most costly tax mistakes happen before a return is submitted: a missing slip, an unclaimed credit, a wrong SIN, or a return filed after the deadline. This page lists the common ones to check for before you file, and the penalty each can bring. If the return has already gone in, fixing a mistake on a filed return covers how to correct it, and the guide to filing a tax return in Canada covers the process from start to finish.
Filing late when you owe triggers an automatic 5% penalty plus 1% per full month late, up to 12 months; the consequences of filing late page covers repeat-offence penalties and relief. The dates themselves are on the tax deadline calendar, and the guide to tax slips explains what each slip reports. After filing, how to know if your tax return was accepted and how to read your Notice of Assessment show whether CRA agreed with what you filed.
Top Tax Mistakes and How They’re Avoided
Filing Mistakes
| Mistake | Impact | How it’s avoided |
|---|---|---|
| Filing late (when you owe) | 5% penalty + 1%/month (up to 17%) | Filing by the April 30 deadline |
| Forgetting to file (no balance owing) | Lose refund; interrupts benefit payments (such as the Canada Child Benefit and GST/HST credit) | Filing even when nothing is owed |
| Wrong SIN or personal information | Delays processing; may not match CRA records | Checking the SIN on file with your employer and your marital status (common-law status counts) before submitting |
| Missing T-slips | CRA will reassess and may add penalties | Checking My Account for all slips by end of March (a forgotten T4 is the usual case) |
| Not reporting all income sources | CRA matches T-slips; penalties for omission | Reporting everything, including gig and side income |
| Using the wrong tax year’s software | Applies incorrect rates and credits | Using current-year certified software |
Missed Deductions and Credits
These are the claims most often left off a return. Each link goes to the page with the current amounts and rules.
| Commonly Missed Credit/Deduction | Who Qualifies | Rules and amounts |
|---|---|---|
| RRSP contributions | Anyone with contribution room | RRSP guide |
| Medical expenses | Prescribed costs above a threshold tied to net income; most over-the-counter medications do not qualify | Medical expense tax credit |
| Charitable donations | Anyone donating to registered charities | Donation credit calculator |
| Tuition credit (federal) | Post-secondary students | Tuition tax credit |
| Moving expenses | Moved 40+ km closer to work or school | Moving expense deduction |
| Home office deduction | Employees working from home or self-employed | Work-from-home deduction; employees need a T2200 from their employer |
| Child care expenses | Parents with children under 16 | Child care expense deduction |
| Disability tax credit | Individuals with qualifying impairment | Disability tax credit |
| Canada Workers Benefit (CWB) | Low-income workers | Canada Workers Benefit |
| Student loan interest | Anyone repaying government student loans | 14% credit on interest paid |
| Union/professional dues | Employees who pay union or professional fees | Union dues deduction |
| Northern residents deduction | Living in a prescribed northern zone | Northern residents deductions |
RRSP and TFSA Mistakes
| Mistake | Impact | How it’s avoided |
|---|---|---|
| Over-contributing to RRSP | 1%/month penalty on excess over $2,000 | Checking your limit on My Account before contributing (RRSP over-contribution rules) |
| Not claiming RRSP deduction for past contributions | Paying more tax than necessary | Carrying the deduction forward to a higher-income year |
| Contributing to RRSP after age 71 | Not allowed (must convert to RRIF by Dec 31 of year you turn 71) | A spousal RRSP accepts contributions until the end of the year your spouse turns 71 |
| Over-contributing to TFSA | 1%/month penalty on excess | Checking room on My Account; re-contributing a withdrawal in the same year can create an excess |
| Withdrawing from RRSP to fund short-term needs | Income tax + lost contribution room | A TFSA or emergency savings avoids both |
| Not naming a beneficiary | RRSP/TFSA goes through estate (probate + delays) | Naming a beneficiary on the account |
Self-Employment and Side Income Mistakes
| Mistake | Impact | How it’s avoided |
|---|---|---|
| Not reporting side income | CRA audits; penalties + interest | Reporting business income on Form T2125 |
| Not collecting GST/HST when required | Penalties; owe back GST/HST | Registering once revenue exceeds $30,000 in 4 rolling quarters (GST/HST on freelance income) |
| Not saving receipts for business expenses | Can’t claim deductions; lost savings | Keeping receipts digitally (photos/scans) for 6 years |
| Not making quarterly instalment payments | Interest charges | Paying quarterly tax instalments when net tax owing exceeds $3,000 |
| Claiming personal expenses as business | Audit risk; penalties | Claiming only expenses with a clear business purpose |
Penalties for Errors and Omissions
Paying late after filing on time brings no penalty, but unpaid balances accrue compound daily interest at the CRA’s overdue-tax prescribed rate (currently 7%). A false statement or omission made knowingly or through gross negligence carries a penalty of 50% of the understated tax or overstated credit, on top of the tax itself and interest.
The penalties for honest mistakes are significant but manageable; the penalties for fraud or gross negligence are far heavier. CRA treats corrections you make yourself far more leniently than corrections it discovers during a review or audit.
The Bottom Line
Most of these mistakes are caught by importing slips with CRA auto-fill, comparing claims with a spouse (see filing as a couple or separately), and reading the missed-deductions list above before submitting. Filing on time matters even when the balance can’t be paid yet, because the late-filing penalty is separate from and in addition to interest on amounts owing. For side income, GST/HST registration is required once revenue passes $30,000. Ways to lower the bill itself, rather than avoid errors, are in how to pay less tax.
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Sources
The figures and rules on this page come from these sources, last checked against them on September 29, 2026. How we check facts.
- Canada Revenue Agency: Prescribed interest rates