Penalties and interest for insurance tax

If you do not file your insurance premium tax return and pay the tax by the filing due date, you'll be charged penalties and interest. 

If you're required to make instalment payments, you'll need to pay by the instalment payment due dates. If you miss any of these payment dates or have deficient payments, you will be charged interest. 

Filing due date

Licensed insurers must file the Insurance Premium Tax Return of Taxable Premiums each year. The tax return is due on March 31 for premiums that were received or became receivable in the previous calendar year. 

If you enter into an insurance contract with an unlicensed insurer, you must file a Return of Unlicensed Insurance. The tax return is due within 90 days of the contract start date. 

Penalties

Late filing penalties are assessed if you did not file your return and pay your tax by the filing due date. The penalty is calculated as:

Penalty = (5% x A) + (1% x A x B)

A = the balance owing for the calendar year or contract on the filing due date

B = the number of months, up to a maximum of 12 complete months, from the filing due date to the earlier of:

• The date you filed the return, and
• The date you were assessed a penalty

Late filing penalties for repeated failure to file are assessed if you:

• Were issued a written demand to file your return and did not file your return within the time specified in the written demand to file the return, and

• Had been assessed late filing penalties in any of the 3 previous calendar years.

In this case, the penalty is calculated as:

Penalty = (10% x A) + (2% x A x C)

A = the balance owing for the calendar year or contract on the filing due date

C = the number of months, up to a maximum of 20 complete months, from the filing due date to the earlier of:

• The date you filed the return, and
• The date you were assessed a late filing penalty for repeated failure to file

Interest

Interest is assessed at a rate of prime plus 3 percent for:

• Late or deficient instalment payments
• Late payments of the balance owing