I guess I don’t pay attention to the Notices of Assessment as they come out. We efiled a client’s T1 yesterday and the Notice of Assessment came out today. As you can see, they have said that my client’s balance, without interest, is due May 13th. I checked the balance. The only interest added to the tax was instalment interest. This seems a bit odd. I tell all my clients to pay by April 30th. Thanks Bob Hamilton.
Don’t change what you are telling clients. It is weird, but it is CRA!
Do you mean instalment interest or arrears interest?
Instalment interest is charged on underpaid instalments during the tax year (ie they were required to pay instalments throughout 2025).
Arrears interest would be an amount charged for non-pay after April 30 (but you have a 2-week grace period in this case). Payment on May 14 will result in arrears interest from May 1-14.
The NOA calculated instalment interest; there is no arrears interest but according to the NOA, he has until May 14 to pay without arrears interest. I told him to pay by April 30.
Then he was likely required to pay instalments during 2025 and did not do so to the amount required. Has nothing to do with May 13.
I don’t think so. Instalment interest only goes to December 31st. The instalment interest is already in the balance shown on the NOA. Now it’s just arrears interest that would be calculated.
Don’t think that is accurate:
My understanding is that “arrears” do not occur until an assessment is rendered…any interest owing as a result of that assessment is “arrears” unless it’s a reassessment and resets interest during a year where instalments were required in which case you may see a mix of instalment and arrears charges.
The difference is only in “what” is calculated…not in the rate. It’s a technicality, but a notabale one.
I was wondering as the balance Due daye is legislated so what provision allows for a 2 week grace period? So I asked Gemini.
“To be clear, there isn’t a specific “two-week grace period” written into the *Income Tax Act* that officially changes the statutory deadline (which for most people is April 30th). However, what you are seeing is a standard **CRA administrative policy** regarding interest calculation on new assessments.
### The Policy: The “Notice Date” Interest Freeze
The CRA’s internal policy is designed to give taxpayers a reasonable window to receive, process, and pay the amount quoted on a new Notice of Assessment or Reassessment without the interest “moving” while the mail is in transit or the bank is processing the payment.
* **How it works:** When the CRA issues an NOA, they calculate the interest owing up to the “Notice Date.” They then typically provide a “pay by” date (often 10–20 days in the future, like your May 14th date).
* **The Benefit:** If you pay the **full amount** shown on that notice by that specific date, the CRA will not charge any additional interest that would have normally accrued between the date they printed the notice and the date you paid it.
* **The Catch:** If you miss that date, even by a day, the interest doesn’t just start from May 15th—it “snaps back” and is calculated daily from the original statutory due date (April 30th) right up until the day they receive your money.
### Legislative Context
While the *Income Tax Act* (specifically **Section 161**) mandates that interest is charged on any unpaid tax from the balance-due day, the CRA has the administrative authority under the **Taxpayer Bill of Rights** and general management powers to set reasonable payment windows.
Additionally, **Section 220(3.1)** of the Act (the “Taxpayer Relief Provisions”) gives the Minister the discretion to waive or cancel interest, which is the legislative “umbrella” that allows the CRA to ignore those few days of interest if you meet their deadline.
### Quick Tips for the Payment
* **Target the Date:** Aim to have the payment *received* by the CRA by May 14th. If paying via online banking, do it 2–3 business days early to account for bank processing times.
* **Small Balance Rule:** Interestingly, the CRA has another policy where they will often cancel or “write off” small amounts of penalty and interest if the total is **$25 or less**, though you shouldn’t rely on this for your main tax balance!”
Thanks for looking into it @allen.scantland. That would seem to be the only answer that makes sense. The problem with the administrative policies is that people tend to rely on them and then CRA decides to enforce the legislation. It also gives the average taxpayer an incorrect understanding of the rules. How can we blame a taxpayer for confusion?
The rules are still the rules, @kevin but CRA does extend that grace period. However, NEVER suggest to a client that this might be the case. What @allen.scantland has written is certainly what I have observed over the years. The tax payer should not be confused - the due date is the due date. The taxpayer should just be thankful that CRA still exercises a modicum of common sense.
Don’t think, @obhorst, that I’m considering telling that client or anyone else to pay after Apr 30th. I thought it’s interesting that CRA would issue something as loosey-goosey as that and something that will confuse people. Administrative treatment is great but can be held against CRA, too.
Actually, it cannot. Courts have pretty consistently ruled that administrative treatment, because it is not legislated (ie written in the Act) is just that…grace from CRA. There is no ability for a taxpayer (or a Court) to force them to follow the same treatement elsewhere or even in the same circumstances as another case.
The other factor in the instant discussion is that banks don’t always forward funds on time…especially manual payments. The administrative grace provided dispatches with the need to adjust frequently payments that otherwise would not attract interest as they were made…but not forwarded…in a timely manner.
I agree with you @SmallBizGuy that administrative relief is a gimme by CRA. CRA has no specific information about this taxpayer and has not been asked to apply any administrative relief. They just arbitrarily extended the payment deadline on this NOA. That’s why I think this is dangerous because people see this and think there is some post-Apr 30 payment deadline. There’s no reason for CRA to offer it up unless the taxpayer files an application for relief from interest. The Courts have also said that administrative relief does not trump legislation. Bottom line, for me, is that they just goofed. Anyway, back to my returns.
The reason CRA offers it up is to allow a grace period for taxpayers to pay what they owe on the assessment without incurring additional interest charges as the payment is in transit.
Viewing this is a “goof” by CRA is bizarre. They don’t have to offer the grace period, but they do, and it’s to the taxpayer’s advantage.
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