Cancellation and Waiver of Interest and Penalties

Guidelines for the cancellation and waiver of interest and penalties is an Interpretation Circular IC92-2 from the Canada Revenue Agency.

This circular provides information and guidelines for taxpayers and employers regarding certain legislation contained in Bill C-18 which gives discretion to cancel or waive all or a portion of any interest or penalties payable, and it applies to taxation years back to 1985.

The circular outlines guidelines on how the Canada Revenue Agency would apply the legislation if taxpayers or employers make a request to cancel or waive interest and penalties for years dating back to 1985. The information required is also described for such requests to be considered.

These are guidelines, and are interpreted according to the legislation and could be adjusted if necessary. If you go to www.ccra-adrc.gc.ca  choose Forms & Publications, Document type, Income Tax Information Circulars then choose IC90-IC99 then click on CI92 to use this Information Circular's guidelines to see if you would be eligible to apply for this assistance.

Penalties and interest may be waived or cancelled in whole or in part where they result in circumstances beyond a taxpayer's or employer's control. There are extraordinary circumstances which could have prevented a taxpayer from making a payment when due, or otherwise complying with the Income Tax Act:

• natural or human-made disasters such as flood or fire 
• civil disturbances or disruptions in services such as a postal strike
• a serious illness or accident, or
• serious emotional or mental distress such as , death in the immediate family

It may be appropriate, in circumstances where there is an inability to pay amounts owing, to consider waiving or cancelling interest in all or in part to facilitate collection. For example:

• when collection has been suspended due to an inability to pay
• when a taxpayer is unable to conclude a reasonable payment arrangement because the interest charges absorb a significant portion of the payments. In such a case, consideration may be given to waiving interest in all or in part for the period from when payments commence until the amounts owing are paid provided the agreed payments are made on time

Taxpayers and employers, or their authorized representatives, can make their requests by writing to the taxation centre where they file their returns, or by sending their requests to the district office serving their area.

To support a request, the following information is required:

• name, address, social insurance number or account number of the taxpayer or employer
• the taxation years involved
• the facts and reasons why the interest or penalties levied, or to be levied, were primarily caused by factors beyond the taxpayers control
• any relevant documents or correspondence including receipts of payments

Contact the Canada Revenue Agency in your area at www.cra.gc.ca  to see if you qualify for  Cancellation or Waiver of Interest and Penalties.