CRA Penalty & Interest Relief Letter Templates
When you owe CRA penalties or interest, you can request relief under s.220(3.1) of the Income Tax Act. CRA considers three grounds: extraordinary circumstances (illness, natural disaster, bereavement), CRA actions (processing delays, incorrect written information), and financial hardship (interest preventing debt resolution). These 5 templates cover the most common scenarios. Each has fill-in fields for your SIN, tax year, penalty amount, and the specific circumstances. File via CRA My Account ('Submit documents') or mail to your regional tax centre. CRA's 10-year limitation means you can request relief for any year within the last 10 calendar years.
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What it contains
How to use it
Identify which template fits your situation
Match your circumstances to one of the 5 templates. If CRA issued a penalty and you had a genuine reason (illness, CRA error, first offence), use templates 1-3. If accumulated interest is preventing you from resolving the debt, use template 4. If you missed an election deadline (s.85(1) rollover, s.45(2) change-in-use, s.83(2) capital dividend), use template 5.
Fill in the bracketed fields with your specific details
Replace every [BRACKETED FIELD] with your actual information. The grounds section is where your case lives or dies — be specific about dates, dollar amounts, and what prevented compliance. Generic language like 'I was busy' will not succeed. CRA weighs specificity and supporting evidence heavily.
Gather supporting documentation
Each template lists the evidence CRA expects. For illness: medical records, hospital admission/discharge letters, doctor's note confirming inability to manage affairs. For CRA error: copies of CRA correspondence containing the incorrect information. For financial hardship: income statements, bank statements showing inability to pay, evidence of payment arrangements. For late election: the completed election form itself plus the prescribed penalty payment (ITA s.220(3.5)).
Submit via CRA My Account or mail
Online: sign into CRA My Account → Submit documents → select 'Taxpayer relief request' → attach your letter + evidence. By mail: send to your regional tax centre — Sudbury Tax Centre (ON, MB, SK, AB, BC, YT, NT, NU), Jonquière Tax Centre (QC), Summerside Tax Centre (NB, NS, PE, NL). Keep a copy of everything. CRA typically responds within 180 days. If denied: request a second administrative review by a different officer. If denied again: Federal Court judicial review under s.18.1 Federal Courts Act within 30 days.
Copy the letter text
Prefer not to download? Copy the text below and paste into your own document.
=== TEMPLATE 1: LATE-FILING PENALTY RELIEF — ILLNESS === [Your full name] [Your address] [City, Province, Postal Code] [Date] Canada Revenue Agency [Your regional tax centre — see Step 4] Re: Request for Taxpayer Relief — Late-Filing Penalty SIN: [Your Social Insurance Number] Tax Year: [e.g. 2024] Penalty Amount: $[amount from notice] Dear Sir or Madam, I am writing to request cancellation of the late-filing penalty assessed on my [tax year] T1 return, pursuant to subsection 220(3.1) of the Income Tax Act. I submit that extraordinary circumstances prevented me from filing on time. Circumstances: [Customise to your situation. Example: "On [date], I was admitted to [hospital name] for [condition/procedure]. I remained hospitalised until [discharge date], followed by a recovery period through [end date] during which I was unable to manage my financial affairs, access my records, or use a computer. My physician, Dr. [name], has confirmed in the attached letter that I was medically incapable of attending to tax obligations during this period."] Once the circumstances giving rise to the delay no longer applied, I [filed the return / engaged a tax preparer / took action] without unreasonable delay, on [date]. Supporting documentation enclosed: - [Hospital admission/discharge records] - [Physician's letter confirming inability to manage affairs] - [Any other relevant medical documentation] Compliance history: I have filed all prior T1 returns on time for the [number] previous tax years. This is an isolated incident directly caused by circumstances beyond my control. I respectfully request that the late-filing penalty of $[amount] be cancelled in full. I am prepared to provide any additional information or documentation you may require. Yours faithfully, [Your signature] [Your printed name] Enclosures: [list] === TEMPLATE 2: INSTALMENT INTEREST RELIEF — CRA REMINDER SAFE HARBOUR === [Your full name] [Your address] [City, Province, Postal Code] [Date] Canada Revenue Agency [Your regional tax centre] Re: Request for Taxpayer Relief — Instalment Interest SIN: [Your Social Insurance Number] Tax Year: [e.g. 2024] Interest Amount: $[amount assessed] Dear Sir or Madam, I am writing to request cancellation of instalment interest charged on my [tax year] income tax, pursuant to subsection 220(3.1) of the Income Tax Act. I paid my quarterly instalments in the exact amounts specified on the Instalment Reminders (INNS) issued by the Canada Revenue Agency, on or before each due date: - March 15: $[amount] — paid [date] - June 15: $[amount] — paid [date] - September 15: $[amount] — paid [date] - December 15: $[amount] — paid [date] Total instalments paid: $[total] CRA's published guidance states that taxpayers who follow the no-calculation (instalment reminder) option will not be charged instalment interest. I relied on CRA's own figures and paid them in full and on time. The subsequent assessment of $[interest amount] in instalment interest contradicts this published safe-harbour guidance. Supporting documentation enclosed: - [Copies of INNS instalment reminder notices] - [Bank statements or payment confirmations showing dates and amounts] I respectfully request that the instalment interest of $[amount] be cancelled in full, as I acted in good faith reliance on CRA's own guidance. Yours faithfully, [Your signature] [Your printed name] Enclosures: [list] === TEMPLATE 3: FIRST-TIME LATE FILING — CLEAN COMPLIANCE HISTORY === [Your full name] [Your address] [City, Province, Postal Code] [Date] Canada Revenue Agency [Your regional tax centre] Re: Request for Taxpayer Relief — First-Time Late Filing SIN: [Your Social Insurance Number] Tax Year: [e.g. 2024] Penalty Amount: $[amount from notice] Dear Sir or Madam, I am writing to request cancellation of the late-filing penalty assessed on my [tax year] T1 return, pursuant to subsection 220(3.1) of the Income Tax Act. This is the first time I have filed a return late. My compliance history with the Canada Revenue Agency is otherwise clean: - I have filed T1 returns for the [number] previous consecutive tax years, all on or before the deadline. - I have no prior penalties, outstanding balances, or compliance issues. - All prior tax obligations have been met in full and on time. The circumstances that led to this isolated late filing were: [Describe briefly — e.g. "a family emergency on [date] that disrupted my normal year-end routine" or "an unexpected job loss that caused significant personal disruption during the filing period."] I have since [filed the return / paid the balance / taken steps to ensure this does not recur, specifically: set up calendar reminders, engaged a tax preparer, etc.]. While Canada does not have a formal "first-time abatement" program, CRA policy IC07-1R1 directs officers to consider a taxpayer's compliance history when exercising discretion. I respectfully submit that my [number]-year record of on-time compliance supports cancellation of this penalty for a single, isolated late filing. I request that the penalty of $[amount] be cancelled. I am happy to provide any further information required. Yours faithfully, [Your signature] [Your printed name] === TEMPLATE 4: INTEREST RELIEF — FINANCIAL HARDSHIP === [Your full name] [Your address] [City, Province, Postal Code] [Date] Canada Revenue Agency [Your regional tax centre] Re: Request for Taxpayer Relief — Interest Waiver (Financial Hardship) SIN: [Your Social Insurance Number] Tax Year(s): [e.g. 2022, 2023, 2024] Accumulated Interest: $[total interest amount] Dear Sir or Madam, I am writing to request cancellation or reduction of accumulated interest on my outstanding tax balance, pursuant to subsection 220(3.1) of the Income Tax Act, on the grounds of financial hardship. Current financial situation: My [employment/business] income declined from $[prior amount] to $[current amount] beginning [date/period], due to [reason — e.g. business closure, job loss, health-related inability to work, market downturn]. Current monthly income: $[amount] Current monthly essential expenses: $[amount] Outstanding CRA balance (principal): $[amount] Accumulated interest to date: $[amount] The accumulated interest of $[amount] represents [X]% of the original tax debt and is preventing me from resolving the underlying balance. I am willing and able to enter a payment arrangement for the principal tax owing, but the compounding interest makes the total debt unmanageable. I have made good-faith efforts to address this debt: - [Payment arrangement established on date / payments made of $X per month] - [Other evidence of effort to pay] Supporting documentation enclosed: - [Notice of Assessment(s) showing original balance] - [Income documentation (T4, T2125, employment records)] - [Bank statements showing current financial position] - [Evidence of payment arrangement or partial payments made] I respectfully request that the accumulated interest of $[amount] be cancelled [in full / reduced to $X] to allow me to resolve the remaining principal balance through a manageable payment plan. Yours faithfully, [Your signature] [Your printed name] Enclosures: [list] === TEMPLATE 5: LATE-FILED ELECTION — s.220(3.2) === [Your full name] [Your address] [City, Province, Postal Code] [Date] Canada Revenue Agency [Your regional tax centre] Re: Request to Accept Late-Filed Election — s.220(3.2) ITA SIN: [Your Social Insurance Number] Election Type: [e.g. s.85(1) rollover / s.45(2) change-in-use / s.83(2) capital dividend] Tax Year: [e.g. 2024] Dear Sir or Madam, I am writing to request that the Canada Revenue Agency accept a late-filed election under subsection 220(3.2) of the Income Tax Act. Election details: - Type: [e.g. "Subsection 85(1) — transfer of property to corporation"] - Original deadline: [date the election should have been filed] - Tax year affected: [year] - Reason for late filing: [explain — e.g. "My accountant at the time did not advise me that an s.85(1) election was required when I transferred business assets to my newly incorporated company on [date]. I became aware of the requirement when engaging a new accountant in [month/year]."] I understand that acceptance of this late-filed election is subject to a prescribed penalty under subsection 220(3.5), calculated as $100 per complete month late (minimum $100, maximum $8,000). I am prepared to pay the prescribed penalty of $[estimated amount]. The completed election form [e.g. T2057 for s.85(1)] is enclosed with this request. Supporting documentation enclosed: - [Completed election form (T2057 / T2059 / other)] - [Supporting schedules showing elected amounts] - [Correspondence or records explaining the delay] - [Prescribed penalty payment or willingness to pay on assessment] I respectfully request that this late-filed election be accepted. I am prepared to provide any additional information required. Yours faithfully, [Your signature] [Your printed name] Enclosures: [list]
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