CRA’s Collection Policies for Individuals

The CRA guide T4060 outlines individual taxpayers’ rights and obligations when they have personal taxes owing to the Government of Canada including:

1.) If balances are not paid within 30 days of the date of when a notice of assessment or reassessment is issued, a second request for the balance owing will be made either by mail or by telephone.

2.) If your balance remains outstanding and you have not been in contact with CRA to discuss payment of your debt, CRA may send you a final letter. The letter will notify you that if you do not make full payment or other satisfactory arrangements within 90 days after the notice of assessment or reassessment, CRA may take legal action such as garnishing your income (that is: CRA may intercept funds payable to you) or initiate other legal action (that is: directing the sheriff to seize and sell your assets).

 3.) If you cannot pay the full amount of taxes you owe, you may be able to make a payment arrangement. CRA will accept payment arrangements when you have exhausted all reasonable possibilities of obtaining the necessary funds by borrowing or re-arranging your financial affairs. If the CRA determines that you are unable to make a full payment, an agent can work with you to develop a plan to help you pay your taxes. Call CRA at 1-888-863-8657 to discuss a payment arrangement.

 4.) If the previous steps have not resulted in a payment solution, legal action could follow 90 days after the notice of assessment or reassessment. Once a garnishee or other legal action is started, it will not usually be withdrawn unless you settle the debt by paying the full balance or providing evidence that the action is creating undue financial hardship. CRA will notify you by mail of the garnishment action.

 5.) If you are entitled to a payment from any other government department (for example: Canada Pension Plan) CRA may request the other government department to retain, by way of deduction or set-off, the payment and apply it against your income tax debt.

 6.) If you are entitled to a refund from any other statute administered by the CRA (for example: a proprietorship GST/HST account) during the period you owe taxes, CRA may take it and apply your refund to your income tax debt and refund any balance to you.

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