Understanding a requirement to pay
When the Canada Revenue Agency (CRA) has been unable to collect the tax debt or make a suitable payment arrangement with the taxpayer or believes that a third party owes (or will owe money) to a taxpayer, they will issue a requirement to pay (RTP) or an enhanced requirement to pay (ERTP) to the third party.
The RTP gives the CRA priority over most other creditors. However, a secured creditor with an interest on assets may have a higher priority over the CRA.
An ERTP is a different type of requirement which gives the CRA priority over the interests of secured creditors. ERTPs are used to collect source (payroll) deductions, GST/HST, or Air Travellers Security charges that a taxpayer has failed to pay.
For the purposes of this webpage only, an RTP should be understood to include an ERTP.
Requirements to pay apply to many different types of payments a third party could make to a taxpayer, including but not limited to:
- salary, wages, commissions, bonuses
- amounts held at your financial institution
- reimbursement of expenses owed to an employee
- rent or lease payments
- loans made by a corporation to a taxpayer, when the corporation is not dealing with the taxpayer at arm’s length (see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length)
- annuity, interest, dividends and other investment proceeds
- accounts receivable
- proceeds of an insurance claim
An RTP is a legal document. You are obligated to comply with it. If you do not comply, you become liable for the amount you did not pay the CRA. The CRA will take action to collect that amount from you.
The CRA sends out an RTP without a court order, but in most cases through its authority under section 224 of the Income Tax Act or section 317 of the Excise Tax Act.
If you send an amount to the CRA because you received an RTP, the taxpayer cannot pursue you financially. The amount you owe the taxpayer is reduced by the amount you send to the CRA. You may advise the taxpayer if you wish, however the CRA sends a copy of the RTP to the taxpayer.
Do not sell any assets such as houses, cars, jewellery, stocks, or bonds unless you have instructions to do so from the taxpayer or another person who has the authority to give instructions. The RTP applies to the sale proceeds if the assets (such as the taxpayer’s house) are sold and converted into cash while the RTP is in effect.
If you have received an RTP and need help or more information, please call the CRA contact person at the telephone number listed on the upper right-hand corner of the RTP. If you cannot reach that person, call 1-800-675-6184.
What to do if you have received an RTP
If you are having difficulty identifying the taxpayer
Call the CRA contact number on the RTP right away.
If you owe money to the taxpayer and payment is due
Send the amount due to the CRA right away.
If you do not owe money to the taxpayer
Keep a copy of the RTP because you may owe money to the taxpayer in the future. Call the CRA contact number on the RTP, or return the completed response form to us letting us know why you will not be making a payment.
If you owe money to the taxpayer but they no longer work for you
You are required to send the CRA money from the employee's final pay. The amount you have to send will depend on the instructions on the first page of the RTP.
If the taxpayer claims to have made arrangements with the CRA
You must still comply with the RTP. Send all monies as instructed unless the CRA advises you in writing that the RTP has been withdrawn.
If you are already sending some of the money you owe the taxpayer to another creditor
You must still comply with the RTP. If there is not enough to pay the other creditor and the CRA, call the CRA contact number on the RTP.
The CRA policy is to give priority to any competing child support garnishment. If you cannot reach anyone at the contact number on the RTP, call 1-800-675-6184.
If the taxpayer has filed a proposal or filed for bankruptcy
If you receive a phone call from a trustee, continue to honour the RTP until you receive written confirmation of the insolvency filing. Call the CRA contact number on the RTP before you take any action. In some instances, the money owed to the taxpayer belongs to the CRA. If you distribute any money, you may become liable.
If you plan to loan or advance money to an employee or to a taxpayer who you are not dealing with at arm’s length, within 90 days from the date you receive the RTP
You are required to send the money to the CRA. For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length.
If you have miscalculated your payments and paid more than you were required to pay, contact the CRA at the number on the RTP.
If you sent a payment and then received the withdrawl of the requirement to pay, contact the CRA at the number on the RTP.
Calculate the amount you must pay to the CRA
The first page of the RTP will show the maximum amount that you have to withhold from the taxpayer and send to the CRA. Send this amount to the CRA for each payment that you owe to the taxpayer unless the RTP instructs you to withhold:
- a fixed amount from each payment
- a fixed amount from all amounts paid in a set time period, such as a month
- a percentage from each payment
Continue to withhold and send these amounts to the CRA during the effective period of the RTP, or until the total you have sent equals the maximum amount on the RTP.
In some cases, the RTP will also instruct you to send all amounts upon termination of employment.
How to pay
Mail your payment to the CRA by following these steps:
- write the account number shown on the remittance form on the front of your cheque or money order
- make your cheque or money order payable to the Receiver General for Canada
- mail the remittance form, with your cheque or money order, to the CRA at the address on the back of the remittance form
- keep a record of the amount and the date of your payment
Look at the terms on the first page of the notice to determine the effective period.
In general, RTPs may be valid for:
- 90 days
- 1 year
- until the debt is paid in full, which could be more than 1 year
Keep a copy of the RTP for the entire period it is in effect and for at least 1 year after receiving it, as you may owe amounts to the taxpayer in the future.
Your obligations end when:
- you no longer owe amounts to the taxpayer, and no other amounts become owing during the effective period of the RTP
- the total amount you have sent to the CRA equals the maximum amount shown on the RTP
- the RTP expires and is no longer valid
- you receive a withdrawal letter from the CRA indicating the RTP is no longer in effect
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