Collections limitation period

A collections limitation period is the time in which the Canada Revenue Agency (CRA) can begin actions to collect a tax debt.

Myth: After the CRA issues a notice of assessment, it has either 6 years or 10 years to collect the debt. If you don’t pay what you owe within that time, the CRA can no longer collect the debt.

Fact: Each tax debt has a 6 or 10 year collections limitation period. The limitation period can be restarted or extended when certain events occur. When these events occur, the total amount of time that the CRA has to collect the debt will be longer than 6 or 10 years. Even after the collections limitation period ends, you can still have a tax debt. Interest will continue to accrue until the tax debt is paid in full.

Start of the collections limitation period

The limitation period starts on the date that a notice of assessment or reassessment is sent, or 90 days after that date, depending on the type of tax debt.

Types of tax debt

The collections limitation period start date and duration will be different depending on the type of tax debt. Some tax debts are subject to collections restrictions, while others are not. The following are some of the most common types of tax debt:

Types of tax debt Collection limitation period (CLP) start date and duration The CRA starts collection action
Individual The CLP starts on the 91st day after a notice of assessment or reassessment is sent. 10-year CLP applies – The CLP can be restarted and extended. This type of tax debt is subject to a 90-day collection restriction for the period after a notice of assessment or reassessment is sent. The CRA can start collection action on the 91st day, unless a notice of objection or appeal is filed.
Corporation The CLP starts on the 91st day after a notice of assessment or reassessment is sent. 10-year CLP applies – The CLP can be restarted and extended. This type of tax debt is subject to a 90-day collection restriction for the period after a notice of assessment or reassessment is sent. The CRA can start collection action on the 91st day, unless a notice of objection or appeal is filed.
Large corporation (as defined under the Income Tax Act) The CLP starts on the 91st day after a notice of assessment or reassessment is sent. 10-year CLP applies – The CLP can be restarted and extended. This type of tax debt is subject to a 90-day collection restriction for the period after a notice of assessment or reassessment is sent. However, the CRA can act to collect 50% of the amount owing by a large corporation as soon as a notice of assessment or reassessment is sent. The CRA can start collection action on the 91st day for the remaining 50% of the amounts owed by a large corporation, unless a notice of objection or appeal is filed.
Payroll deductions The CLP starts the day after a notice of assessment is sent. 6-year CLP applies – The CLP can be restarted and extended. This type of tax debt is not subject to collection restrictions. The CRA can start collection action as soon as a notice of assessment is sent. If a notice of objection or appeal is filed, the CRA can continue to collect the debt.
Goods and services tax / harmonized sales tax (GST/HST) The CLP starts the day after a notice of assessment is sent. 10-year CLP applies – The CLP can be restarted and extended. This type of tax debt is not subject to collection restrictions. The CRA can start collection action as soon as a notice of assessment is sent. If a notice of objection or appeal is filed, the CRA can continue to collect the debt.

For tax debts subject to collection restrictions, the CRA cannot start collection action:

  • during the 90 days after a notice of assessment or reassessment is sent
  • during the time that you dispute your debt by filing a notice of objection or appeal

However, if the CRA determines that it might not be able to collect a tax debt because of collection restrictions, it can apply to the Federal Court (Canada) for a jeopardy order. If granted, this order will let the CRA take collection action immediately. For more information, go to Collection of tax debts in jeopardy.

Restart of the collections limitation period

The limitation period is restarted when either you or the CRA takes certain actions. Tax debts subject to the 6-year limitation period are restarted for another 6 years and tax debts subject to the 10-year limitation are restarted for another 10 years.

The following are examples of actions that will restart the collections limitation period. This is not a complete list.

Actions you initiate

The collections limitation period will restart when you:

  • make a voluntary payment
  • write a letter to the CRA proposing a payment arrangement
  • offer to provide security instead of paying the amount owed
  • make a written request for a reassessment of an amount assessed
  • file a notice of objection with the CRA
  • file an appeal with the Tax Court of Canada
  • ask the CRA if you can make pre-authorized debt payments

Actions the CRA initiates

The CRA takes various actions to collect tax debts when taxpayers don’t make voluntary payments. The collections limitation period will restart when the CRA:

  • issues a garnishment or statutory set-off to collect an outstanding tax debt when you don’t make voluntary payments
  • applies a refundable credit to your tax debt and notifies you by sending you a letter or statement of account
  • issues a notice of assessment or reassessment against a third party for amounts you owe
  • certifies your tax debt in the Federal Court of Canada
  • initiates seizure and sale action to collect your outstanding tax debt

Extension of the collections limitation period

The events listed below can extend the collections limitation period. When this happens, the clock stops running on the date that an event begins and it will not run during the event. This has the effect of stalling the collections limitation period. When the event is completed, the collections limitation period resumes where it left off. Other events can then restart the limitation period. It will end when the 6‑year or 10-year limit has been reached, even if it took more years than that to reach that limit if you include the stalled time.

The following events can extend the collections limitation period:

  • You file an assignment (bankruptcy or proposal) under the Bankruptcy and Insolvency Act, Farm Debt Mediation Act, or Companies’ Creditors Arrangement Act.
  • The CRA accepts security instead of payment of a tax debt.
  • You become a non-resident of Canada after the CRA issues a notice of assessment or reassessment.
  • The CRA postpones collection action without accepting security for an objected or appealed GST/HST debt. This applies only to GST/HST tax debts assessed under the Excise Tax Act.
  • You file a notice of objection with the CRA. This will extend the limitation period only for tax debts subject to collection restrictions.
  • You file an appeal with the Tax Court of Canada. This will extend the limitation period only for tax debts subject to collection restrictions.

Note

Filing a notice of objection with the CRA or an appeal with the Tax Court of Canada will restart the collections limitation period for all types of tax debts because both of these actions are considered acknowledgments of debt. Similarly, if your tax debt is subject to collection restrictions, filing an objection or appeal will extend the collections limitation period.

End of the collections limitation period

The limitation period ends after either 6 or 10 years from the date that it started. Certain events can restart or extend the collections limitation period. If this is the case, the limitation period will end 6 or 10 years from the last restart date. Once the period ends, the CRA cannot take any further action to collect the debt. However, the tax debt still exists and you can make voluntary payments. Voluntary payments you make after the limitation period ends will not restart it.

Example: Events that change the end date of the collections limitation period

In this example, the CRA assessed the 2014 tax return of an individual taxpayer. Personal income tax debts are subject to the 10-year collections limitation period and the 90-day restriction on collections. This example also applies to any tax debt that is subject to collection restrictions.

Date Event Collection limitation period (CLP) starts, restarts, is extended or resumes CLP ends
June 1, 2015 Notice of assessment sent for the 2014 tax year, taxpayer owes $15,000. August 31, 2015 – the CLP starts on the 91st day after the CRA sent the notice of assessment. August 31, 2025 (10 years from the date the CLP started)
October 4, 2015 Taxpayer files a notice of objection. This is a written acknowledgment of the debt and restarts the CLP. October 4, 2015 – CLP restarts New CLP end date – October 4, 2025 (10 years from the date the CLP restarted)
Because this tax debt is subject to collection restrictions, filing the notice of objection also extends the CLP. The CLP will stay at day one until the objection is resolved. CLP extended CLP end date is unknown at this point – the CLP end date will be recalculated when the objection is resolved
July 10, 2016 CRA resolves the objection and confirms that the taxpayer owes the 2014 tax debt. A new 90-day collection restriction applies when the objection is confirmed. October 9, 2016 (91st day following the CRA’s confirmation of the debt) – the CLP resumes as day two. New CLP end date – October 7, 2026 (calculated from day two of the 10-year CLP)
November 30, 2016 Taxpayer makes a voluntary $100 payment toward the tax debt. Each time the taxpayer makes a voluntary payment on the debt, the CLP is restarted at day one. November 30, 2016 – voluntary payment restarts the CLP New CLP end date – November 30, 2026 (10 years from the date the CLP restarted)
January 25, 2017 Taxpayer stops making voluntary payments toward the debt. The CRA issues a garnishment to the taxpayer’s employer. The CLP is restarted for 10 years from the date of the garnishment. Each time the CRA takes an action to collect the tax debt; the CLP is restarted at day one. January 25, 2017 – CLP restarts New CLP end date – January 25, 2027 (10 years from the date the CLP restarted)

The end date of the collections limitation period is affected by many events. In this example, if no other events restart or extend the CLP from the date that the CRA issues the garnishment on January 25, 2017, the CLP for the 2014 tax debt will end on January 25, 2027. After that date, the CRA will not be able to initiate any further actions to collect the tax debt. However, the debt still exists and the taxpayer can make voluntary payments toward it. Any payments that the taxpayer makes towards the tax debt, after the CLP has ended, will not restart the CLP.

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