CRA Tax Collections – How to deal with Tax Debt

Taxpayers are often overwhelmed by a tax assessment or a Tax Statement of Account that shows a balance owing that is impossible to pay. One common reaction is to ignore it since you can’t afford to pay.

If I ignore CRA will they go away?

A CRA tax debt has to be addressed immediately. If CRA has assessed you for income taxes or GST owing and you have not made acceptable (to CRA) payment arrangements, a CRA collections officer will commence enforcement action.

What can CRA do to enforce payment of my tax liability?

Enforcement action will usually consist of seizing your bank account, garnishing (seizing) your wages or accounts receivable and sometimes registering a lien on your home. CRA can also take action to seize your personal property to sell and repay your tax debt.

How do I deal with a CRA collections agent?

Dealing with the CRA officer yourself is usually a mistake. Collection officers are very aggressive and will come to your home or office with one purpose – collect as much as possible as quickly as possible. They have many collection powers, but may mislead taxpayers as to what their rights are.

How can I resolve my matter with CRA collections?

You need to retain a professional as soon as CRA notifies you of a tax debt. We can help. We have extensive experience in dealing with CRA collections and have been solving tax debt problems since 1987. We may be able to challenge your tax assessment by filing a Notice of Objection. If not, we can often negotiate a payment arrangement that is acceptable to you as well as to the tax department collections agent. If these negotiations are done at an early stage, we can usually avoid enforcement actions such as bank account seizure or wage garnishments. If your bank account has already been seized or your wages garnished, once a satisfactory payment schedule is agreed to, CRA will lift the garnishment and release your bank account.

The penalties and interest on my tax liability are through the roof – is there anything I can do?

We may be able to reduce penalties and interest on your full tax debt by filing a Taxpayer Relief (Fairness) Application.

What will happen if I am never able to pay off my tax liability?

If the amount is too large to ever pay off we will direct you to a bankruptcy trustee who will either make a consumer proposal or submit a bankruptcy application to fully eliminate the taxes owing.

About the Author

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David J. Rotfleisch

David J. Rotfleisch, a leading Canadian tax lawyer, is not only a certified specialist in taxation but also a chartered professional accountant. Most recently, David is a pioneer in Canadian crypto taxation.

As of April 2020, he was one of 12 Ontario Certified Specialists In Taxation™.

Learn more about David J. Rotfleisch