Missed the Deadline on a CRA Demand to File? What Happens Next and How to Limit the Damage
Missed the deadline in a CRA demand to file letter? What the CRA can do next (arbitrary assessment, penalties, prosecution) and the steps to take this week.
If you missed the deadline in a CRA demand to file, the CRA can assess you without your input, add the repeat-filer penalty, and in serious cases prosecute. But filing the return now still matters. A filed return can replace an arbitrary assessment and stop the problem from growing.
For what the letter itself means, see our main-site explainer on the CRA demand to file letter. This page is about the next step: the date has already passed.
What the CRA can do once the deadline passes
- Arbitrary assessment. Under section 152(7) of the Income Tax Act, the CRA can estimate your income and assess tax, often using deposits or industry figures and no expenses.
- Higher penalties. A demand is one trigger for the repeat late-filing penalty (10% + 2% per month on T2/T1) if you were penalized in any of the previous three years (canada.ca). For GST/HST, ignoring a demand can add a $250 penalty.
- Collections. Once an assessment exists, collections can follow, including a requirement to pay to your bank or customers.
- Prosecution for failing to comply. It's rare for people who engage, but it's possible.
What to do this week
- Call the number on the letter, or have your representative call. Explain that the returns are being prepared and ask for a short extension. Write down the date, the agent's ID and what was agreed.
- Get a CRA authorization in place so your bookkeeper can see the account, the notices and any assessments already issued.
- Prioritize the demanded return. File that year first, even if earlier years are also missing.
- Gather bank statements for the year. They're the backbone of rebuilding the books.
Example (hypothetical)
An Ontario e-commerce corporation that grew to about $900k got a demand for its 2023 T2 while its old bookkeeper wasn't answering. The 90-day date passed. The owner calls the CRA, authorizes a new representative, and the 2023 return is rebuilt from bank and Shopify data and filed first. The other years follow in order.
Can VDP still help?
Usually not for the demanded year, because the CRA has already contacted you about it. Other years or tax types the demand didn't cover may still qualify. See our VDP guide.
How Sansar helps
We take over CRA contact, rebuild the books and file the demanded return first, then the rest. It's one all-inclusive flat rate with our 100% Happiness Guarantee. See CRA letter help or the main-site CRA Letter Analyzer.
Book a call today → · How onboarding works and what documents we need →
FAQ
How long does a CRA demand to file usually give me? The deadline is printed on the letter. It's often 30 to 90 days. Always go by the date on your own letter.
Is it too late to file after the demand deadline? No. The CRA still accepts the return, and filing it can replace an arbitrary assessment based on estimates.
Will I go to jail for missing a demand to file? Prosecution is possible but rare for taxpayers who engage and file. Fines are more common in prosecuted cases.
Can I ask for more time? Yes. Call the CRA before or right after the deadline, explain what's being prepared and ask for an extension. Keep a record of the call.
Does the demand cover my GST/HST too? Only if the letter says so. Income tax and GST/HST demands are usually separate letters.
Written by Gurdeep Sangha, founder of Sansar Solutions, a Vancouver-based bookkeeping and tax firm serving small businesses across Canada (mainly Ontario, Alberta and BC). Sansar is not a CPA firm; Notice to Reader and review engagements go through partner CPAs. This guide is general information, not tax or legal advice for your situation. Last reviewed: October 2026.