When asked about the application of the ETA s. 284.1 penalty to an unfiled return, and whether a zero dollar line item triggers the minimum penalty amount of $1,000, CRA stated:
Where an information return that was not filed on time is subsequently filed, and the correct amount reported on the particular line is zero … there would be no penalty under subsection 284.1(1) based on the formula for calculation the penalty in that subsection. …
Where an information return that was not filed on time is subsequently filed, and the correct amount reported on the particular line is zero … a penalty under subsection 284.1(2) would be calculated based on the formula in that subsection.
Specifically, a penalty under subsection 284.1(2) may apply if a reporting institution fails to provide reasonable estimates of amounts for which estimates can be provided when and as required. For each failure, the penalty is equal to the lesser of $1,000 and 1% of the total of:
- all amounts that became collectible or that were collected by the reporting institution, as or on account of the GST/HST, in a reporting period in that fiscal year; and
- all amounts that the reporting institution claimed an as input tax credit in a GST/HST return filed by the reporting institution for a reporting period in the fiscal year.
It is important to note that a penalty under subsection 284.1(1) or (2) of the ETA will only apply where the reporting institution did not exercise due diligence.
Where a return has not been filed, the CRA may apply the $1,000 penalty for a particular line in the absence of information that would support a lower penalty amount.
