Corporate income tax, GST/HST and payroll deductions debt collection

We're reaching out to taxpayers

As of September 2020, you may receive a phone call or letter from the CRA about your existing debt. The CRA will reconnect with taxpayers to re-evaluate their financial situation and agree to a payment arrangement where possible. No legal actions will be taken at this time.

Paying your debt all at once, and in full, helps you avoid interest and other legal and financial consequences. However, if you cannot pay the full amount now, there are options for you. Ignoring your debt does not make it go away. The Canada Revenue Agency (CRA) will work with you to resolve your debt. 

Debt payment

Payment in full

To pay the full balance of your business debt, go to Payment options.

Partial payment

If your business can only make a partial payment, you must also make a payment arrangement to pay the balance of the business debt. A payment arrangement lets your business make payments over time until the entire debt, including interest, is fully paid.

To make a partial payment, go to Payment options. The CRA will apply the payment toward the oldest tax debt unless you request otherwise. The debt will gain interest until you pay the full balance.

Payment arrangement

A payment arrangement is an agreement between you and the CRA to pay your debt over a certain period. The CRA will consider a payment arrangement when you have shown that you have tried to pay your debt in full by either reducing your expenses or borrowing funds. After reviewing your financial details, the CRA will work with you to determine the amount and length of the payment arrangement.

To make a payment arrangement:

  1. Go to Payment arrangement calculator
  2. Contact the CRA to set up your payment arrangement
  3. Go to Payment options to make your payment

Your business must pay as agreed, continue to file all returns on time, and stay up to date with tax obligations. Payment arrangements may be subject to periodic reviews.

Even if you have a payment arrangement and are making payments, the CRA is authorized to take amounts from any benefits or credits you receive when you have a debt.

If your situation changes and your business cannot continue with the payment arrangement, you must contact the CRA. If you do not, the CRA may proceed with legal action to collect the balance of debt. Go to Consequences of not paying for more information.

If the business cannot make a payment or payment arrangement, go to Unable to pay.

Trust funds

Your business’s tax debt may include corporate income tax and trust fund amounts. Trust fund amounts cannot be used as cash flow. Even if you keep these amounts with your personal or business funds, the amounts are considered to be held separate and apart. Trust funds are:

  • GST/HST that you collect from, and have charged your customers (minus allowable input tax credits)
  • payroll (income tax, CPP, EI) that you deduct and withhold from the wages of your employees, as well as the employer’s portion of CPP and EI

Related links:

Unable to pay

If your business cannot meet its tax obligations, contact the CRA.

If you do not call or make a payment arrangement, the CRA may take legal action to collect the balance. Go to Consequences of not paying for more information.

Taxpayer relief provisions

In some circumstances, you may ask for relief from penalties and interest, and reduce the amount your business owes. Go to Taxpayer relief provisions for more information.

Insolvency or bankruptcy

If you feel your business is insolvent or are considering corporate bankruptcy, visit the Office of the superintendent of bankruptcy.

Related links:

Consequences of not paying

If your business does not pay their debt or refuses to cooperate, the CRA may take legal action which could result in serious financial or legal consequences.

Before starting legal action, the CRA must do the following:

  • make 1 attempt to give verbal legal warning by phone
  • send 1 written legal warning letter

The notice of assessment or reassessment is considered the written legal warning for goods and services tax/harmonized sales tax (GST/HST) and payroll deduction amounts owing. Once a verbal legal warning is attempted, the CRA can proceed with collections action. The CRA can continue to collect amounts assessed on these accounts even if you filed an objection or an appeal to the Tax Court. 

If the CRA determines there is a risk of not collecting all or part of the assessed corporate income tax debt, it can apply to the Federal Court or the superior court of a province for a jeopardy order. This allows the CRA to secure any assets that you own and to take immediate action to collect the tax debt.

Set-offs can be issued as soon as a notice of assessment has been sent.

If you are a large corporation, as defined in the Income Tax Act, and have filed an objection or an appeal, the CRA can start collecting 50% of your assessed income tax owing right away.

For more information, go to Legal warning about collection of debt.

Once the CRA has started any of the following legal actions, the CRA will not usually withdraw them.

To avoid legal action, go to Debt payment or Unable to pay

  • Garnishing income or other sources

    Requirement to pay (redirecting money owed to you by a third party)

    The CRA can issue a Requirement to pay (RTP) to a third party that owes your business money or is holding funds for the business. A third party can be an individual, a bank or other sources of funds such as the company’s accounts receivable. The RTP instructs the third party to redirect the funds to the CRA. Redirected funds received by the CRA are applied to the corporate tax debt. For more information, go to Understanding a requirement to pay.

    Enhanced requirement to pay (ERTP)

    This is a different type of requirement which gives the CRA priority over the interests of secured creditors. ERTPs are used to collect payroll deductions and GST/HST debts (trust fund amounts).

    Set-off (redirecting money owed to your business by the federal government)

    If your business is owed money by any federal government department or agency, the CRA can issue a set-off to redirect the funds, and apply these amounts to your business’s tax debt.

    The CRA can use any GST/HST credits or any future income tax refunds owing to the business, to reduce the business’s debt.

    Set-offs can be done even if your business has a payment arrangement and is making payments. 

  • Asset liens and seizures

    The CRA can get a certificate confirming the amount your business owes. This will make the debt a matter of public record and allow the CRA to proceed with asset liens and seizures. The CRA will usually notify you by mail that the debt has been certified in Federal Court. The letter advises that if you do not resolve the account, the CRA may take further legal action to pay the debt.

    In some instances, such as in the case of debts that are at risk of not being collected (in jeopardy), the CRA may advise verbally that the debt has been certified in Federal Court.

    Registering a lien on assets

    Once the debt is certified, the CRA can register a lien against the business's assets and property. Registering a lien will secure the amount of debt owing, by establishing creditor priority in the event of a sale. This means, if the business sells an asset, the tax debt is automatically paid from the proceeds of the sale, before it receives any remaining proceeds.

    Seizing and selling your assets

    If the business's debt remains outstanding, the CRA may get a writ or memorial to seize and sell its assets and property, including inventory.

    If the CRA sells the business's assets, the CRA will use the proceeds to pay:

    • the tax debt
    • any costs charged by the bailiff hired to sell the assets on behalf of the CRA

    You will still have to pay any remaining tax debt.

  • Third party assessment

    A third party assessment allows the CRA to hold a third party legally responsible to pay another’s tax debt. The third party can be a financial institution, business partner, director, individual or another corporation.

    Below are some examples of third party assessments.

    Non-arm’s length (related) transfer assessment

    If you have a debt with the CRA, then transfer property to an individual or corporation that is non-arm's length, there could be consequences.

    If the property was transferred at less than fair market value, the CRA can issue an assessment against the recipient of the property. The assessment will be for the difference between the fair market value of the property and what the recipient paid for it. The assessment will only include debt that was incurred as of the date of the transfer and preceding years.

    For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length.

    Non-compliance of a requirement to pay (RTP)

    If you receive an RTP from the CRA, you are legally obligated to comply with it. If you fail to comply, you will become liable for the amount you did not pay and the CRA will take legal action to collect that amount from you.

    As a recipient of an RTP, you become liable if you:

    • do not pay the CRA when you owe money to a taxpayer
    • continue to pay the taxpayer amounts you are legally required to pay to the CRA
    • pay someone else on behalf of the taxpayer, such as a relative or another creditor, instead of the CRA
    • loan or advance money to the taxpayer within 90 days, as specified in the terms of the RTP

    Directors’ liability assessment (financial obligation of directors)

    If a corporation has not remitted its payroll or GST/HST amounts (trust funds), the CRA can issue a directors’ liability assessment against those who were its directors at the time when the corporation failed to deduct, withhold, or pay trust amounts.

    The directors’ liability assessment makes the directors personally liable, together with the corporation, to pay part or all of the corporation’s trust debt. It allows the CRA to take legal action against the directors to collect the debt as it would from the corporation. The liability includes penalties and interest associated with these trust amounts.

  • Deemed trust claim letter

    The CRA has the authority to collect amounts considered held “in trust” by your business. These amounts include payroll deductions and GST/HST collected. This claim letter gives the CRA priority over other creditors collecting amounts owed to them. If you have a deemed trust debt owing to the CRA, the amount of the debt becomes secured to the CRA over all your assets, regardless of any security interest you may have given to other creditors. The CRA also has priority over the proceeds of the sale of any of your assets.

    The CRA does not have to register deemed trust debts in a public registry, such as a personal property security registry or a land titles office registry.

    The CRA may issue a deemed trust claim letter to a creditor because of the CRA's priority over the proceeds of a sale. This could occur, for example, if you sold a business asset and used the proceeds of the sale to pay a debt to a creditor, instead of paying your deemed trust debt to the CRA.

    The CRA cannot declare a GST/HST deemed trust claim against a secured creditor who received proceeds from the sale of a taxpayer’s assets if the taxpayer has filed an insolvency event, unless the CRA established their security interest before/upon the filing.   

    Deemed trust priority can be a complicated issue. You may wish to seek legal or professional advice.

Related links:

Contact the CRA
  • Calls from within Canada and the United States

    You can complete a callback request to have a call centre agent call you within minutes or locate the call topic and corresponding phone number from the tables below.

    Make a payment arrangement for an existing debt
    (from within Canada and the United States)
    Call topics Phone number Hours of service Callback request form
    Corporate tax debt 1-866-291-6346 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    Corporation tax debt call request
    GST/HST debt 1-877-477-5068 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    GST/HST tax debt call request
    Payroll
    deductions debt
    1-877-548-6016 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    Payroll tax debt call request
    Teletypewriter (TTY) 1-800-665-0354 Monday to Friday (except holidays)
    9 am to 5 pm (local time)
     

    See Services for persons with disabilities for information about services and alternative contact formats.

     

    For general enquiries
    (from within Canada and the United States)
    Call topics Phone number Hours of service
    Non-resident corporations and Corporation accounts* 613-940-8497 Monday to Friday (except holidays)
    9 am to 6 pm (Eastern time)
    Saturday and Sunday closed
    Other questions about your business account 1-800-959-5525 Monday to Friday (except holidays)
    9 am to 6 pm (local time)
    Saturday and Sunday closed

    * Corporation accounts include sole proprietors, partnerships, self-employed individuals, payroll accounts and GST/HST enquiries.

    The CRA accepts collect calls by automated response. Contact your service provider or operator to initiate the collect call.

  • Calls from outside Canada and the United States

    The CRA accepts collect calls by automated response. Contact your service provider or operator to initiate the collect call.

    Make a payment arrangement for an existing debt
    (from outside Canada and the United States)
    Call topics Phone number Hours of service
    Corporate tax debt 613-221-3003 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    GST/HST debt 613-221-3003 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    Payroll deductions debt 613-221-3003 Monday to Friday (except holidays)
    7 am to 8 pm (Eastern time)
    For general enquiries
    (from outside Canada and the United States)
    Call topics Phone number Hours of service
    Non-resident corporations and Corporation accounts* 613-940-8497 Monday to Friday (except holidays)
    9 am to 6 pm (Eastern time)
    Saturday and Sunday closed

    * Corporation accounts include sole proprietors, partnerships, self-employed individuals, payroll accounts and GST/HST enquiries.

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