Does the CRA late filing penalty apply if the partnership owes no tax?
The ordinary late filing penalty is worked out on a balance owing. For the 2025 tax year it is 5 per cent of that balance, plus 1 per cent for each full month the return is late, to a maximum of twelve months. A partnership does not pay the tax on its own income, so on a partnership information return there is usually no balance for that calculation to bite on. The exposure sits on the form and the delay instead. That is why an unfiled partnership year with no tax in it can still be expensive, and why the fact that nothing was owed is not an answer to the letter.
Can my partners file their own returns before the late T5013 is done?
They can, and sometimes they have to, but they are then filing on figures the partnership has not yet fixed. The allocation and the source of income are decided on the partnership return, and both flow straight into each partner's own return, in each country where a partner files. If the late return changes either, every partner's filing has to be amended behind it. Where a partner files in two countries an amendment is two amendments, on two timetables. It is usually cheaper to settle the allocation first and file once.
We filed the T5013 late two years running, so is the penalty doubled?
No. Repetition on its own is not what triggers the higher figures. For the 2025 tax year the higher rate applies where the CRA issued a demand to file and had already charged a late filing penalty in any of the three preceding tax years: 10 per cent of the balance owing, plus 2 per cent for each full month the return is late, to a maximum of twenty months. Both conditions have to be met. Twenty months is also not double twelve, so the higher figures are not simply the ordinary ones doubled. If a demand has been received, say so at the first meeting, because it changes the order of the work.
Does interest keep running while the partnership return sits unfiled?
The penalty itself does not compound. Interest does: it compounds daily on an unpaid balance. On a partnership the two come apart, because the partnership is not the party holding the balance. The tax on partnership income is assessed on the partners, so interest accrues on their accounts while the slips they need are still outstanding. A partner who cannot see their allocation cannot pay the right amount, and the interest carries on regardless. That is the reason to get the slips dated and issued before arguing about anything else.
How do we report a non-resident partner on a T5013 filed late?
The same way as on a timely one, and that is the point: the late return still has to state the allocation and the source of each amount, and a non-resident partner's share brings withholding questions the partnership has to answer rather than pass along. Before the return goes in, the partnership needs the partner's residency evidence on file and a settled view of what each allocated amount actually is, because the character of the income and the partner's residence together decide how it is treated on the way out of Canada. Filing first and asking afterwards is how partnerships end up amending.
Should we fix the allocations before filing the overdue partnership return?
Yes, in almost every case. An overdue return filed on allocations that do not match the partnership agreement produces slips that are wrong, and those slips have usually been used by the time anyone notices. Each partner then carries a filing built on a figure the partnership has since changed. Reconstruct the allocation from the agreement and the accounts, agree it with the partners, then file. Fixing the order of the work costs a few weeks; fixing it afterwards costs an amended return for every partner, in every country where one of them files.
Does a foreign-owned US entity need an EIN?
Yes, for almost anything it must do: file its returns, operate payroll, open a bank account, and act as a withholding agent on payments abroad. It is applied for on Form SS-4, and the part that stalls foreign owners is the responsible party — a real person with a US identification number is expected, and where none exists the application route and the supporting explanation both change. It is worth starting early because downstream registrations queue behind it. See EIN applications.
Do I pay tax twice on a foreign dividend?
Not at full rates if the relief is claimed. The paying country usually withholds at source, capped by treaty where one applies and the paperwork is in place; your residence country then taxes the dividend and credits the foreign withholding against its own charge. Where the withholding exceeded the treaty rate because no declaration was filed, the excess is recovered from the paying country, not credited at home. See the dividends article.
