Free calculator
Late payment interest calculator
Enter the overdue amount, your monthly rate and the days it’s late. You get the interest, by the day, and the yearly rate to print next to the monthly one.
Interest
$44.38
- Overdue amount
- $2,000.00
- Interest: 45 days at 1.5% a month (18% a year)
- $44.38
- New amount due
- $2,044.38
State it on your invoices as “1.5% per month (18% per annum)”: the Interest Act limits interest quoted only per month to 5% a year. No GST/HST is charged on late-payment interest.
Invoice this interestState the yearly rate
Section 4 of the Interest Act: if you quote interest per month (or per day or week) without the yearly equivalent, you can only collect 5% a year. Write “1.5% per month (18% per annum)” on your invoices and terms.
Interest is worked out here as simple interest by the day: the overdue amount × the yearly rate × days late ÷ 365. $2,000 at 1.5% a month for 45 days is $44.38.
On your invoice
- Agree the rate in your terms before you charge it, and print it on every invoice.
- Don’t charge GST/HST on late-payment interest: the CRA says it isn’t subject to tax.
- Keep it under the Criminal Code’s 35% a year; this calculator stops at 2.9% a month (34.8% a year).
Last updated 2026-10-01. This calculator is a guide, not tax advice.
Frequently asked questions
Can I charge interest if my invoice didn’t mention it?
Interest is easiest to claim when your terms set it out before the work. Without an agreed rate, the Interest Act sets 5% a year where interest is payable.
Is late-payment interest taxable?
No. The CRA tells registrants not to charge GST/HST on late-payment surcharges.
What’s the most I can charge?
The Criminal Code caps interest at 35% a year (with some exceptions for commercial loans). 2.9% a month is 34.8% a year.