What happens if I file my arrival-year return late?
The schedule travels with the return, so the consequence is the return's rather than the form's. For the 2025 tax year the late-filing penalty is five per cent of the balance owing for the year, plus one per cent of that balance for each full month the return is late, to a maximum of twelve months. Interest is charged separately and compounds daily on what is unpaid. The other cost is practical rather than charged: until the residency dates are on file, the prorated credits on a transition-year return have nothing supporting them, so the assessment is unlikely to match what you filed.
Is there a separate penalty for the residency schedule itself?
The charge is on the return. The schedule is part of that return rather than a standalone filing with a due date of its own, so there is no second penalty for the dates arriving late. That is a smaller comfort than it sounds, because a transition-year return without its dates is incomplete in the way that matters: the residency split and the prorated credits both key off what the schedule says, and an assessment issued without them can leave you arguing about the substance of the year as well as about the charge on it.
I owe no tax for my departure year — is there still a penalty?
The 2025 penalty is worked out as a percentage of the balance owing, so where nothing is owing the calculation comes to nothing. A departure year is a poor place to assume that, though. The deemed disposition on leaving can put an accrued gain into income in a year with no sale and no cash received, and a return that shows a nil balance before that calculation is done may not show one afterwards. Establishing whether a balance exists is the first piece of work, not an assumption to file on.
Does the penalty double if I have filed late before?
Filing late twice is not by itself what raises the rate. The higher rate applies where the CRA issued a demand to file and charged a late-filing penalty in any of the three preceding tax years. Where it does apply, the 2025 figures are ten per cent of the balance owing plus two per cent for each full month, to a maximum of twenty months. That is not a doubling of the ordinary charge, and the month cap moves from twelve to twenty rather than to twenty-four. Check whether a demand was actually issued before accepting the higher rate.
Does the late filing penalty compound each month?
No. The penalty is a flat percentage plus a fixed percentage for each full month the return is outstanding, and it stops at its month cap; it is not applied to itself. Interest is the part that compounds, daily, on whatever balance is unpaid, and it keeps running after the penalty has reached its ceiling. On an old transition year the interest is often the larger figure by the time the return goes in, which is why remitting an estimate towards the balance while the filing is being prepared is worth considering.
Can I add missing residency dates to a year already assessed?
Yes, by adjusting the year rather than by filing a second return. The dates then feed back into the parts of the assessment that depended on them: the proration of credits for the period you were resident, and the boundary between the income reportable on a worldwide basis and the rest. Expect the adjustment to change figures you did not query, because those figures were computed on a full-year assumption. It is worth working out the corrected result yourself before requesting the change, so the reassessment can be checked against something.
Does keeping a bank account or a house make me resident?
A house available to you is one of the strongest indicators, especially with family living in it. A bank account on its own is a secondary tie that matters only in aggregate. Authorities weigh the whole picture: dwelling, spouse and dependants first, then accounts, licences, memberships and registrations. Leaving with a suitcase while the family home stays occupied rarely ends residency. See keeping a home while abroad.
What is RNOR status and why does it matter to a returning NRI?
Resident but Not Ordinarily Resident is a transitional Indian status that can apply for a limited period after you return, based on how long you were non-resident before. While it lasts, certain foreign income stays outside the Indian net that would be taxed once you become an ordinary resident — which makes the timing of a return date, and of realising foreign gains, a genuine planning decision rather than an administrative one. See the RNOR window.
