Tax collections limitation period

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

The collections limitation period start date and duration will be different depending on the type of tax debt. The limitation ends after either 6 or 10 years from the date that it started. Certain events can restart or extend the 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.

Start of the collections limitation period

The following are some of the most common types of tax debt:

  • A 6-year CLP applies to a business payroll debt and starts the day after a notice of assessment or reassessment is sent
  • A 10-year CLP applies to:
    • business GST/HST debt
    • individual tax
    • corporation tax
    • large corporation (as defined under the Income Tax Act)

The start date for a 10-year CLP depends on the type of debt:

  • Business GST/HST debt starts the day after a notice of assessment or reassessment is sent.
  • Individual, corporate and large corporation tax start on the 91st day after a notice of assessment or reassessment is sent.
Restart or extend the collections limitation period

A limitation period can be restarted or extended when certain actions occur.

Actions that restart the collections limitation period

Tax debts subject to the 6-year limitation period are restarted for another 6 years, and 10-year limitation debts are restarted for another 10 years.

The following are some examples of actions that will restart the collections limitation period.

  • Actions you initiate
    • 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
    • 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
    • issues a garnishment or set-off to collect an outstanding tax debt when you don’t make voluntary payments
    • 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 of assets to collect the outstanding debt

Actions that extend the collections limitation period

When a limitation is extended, 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 CLP resumes where it left off. As a result, it may take more than the 6 or 10 years to reach the limit. For example, if there was an event that extended a 6 year CLP by 2 years, it would actually take 8 years to reach the CLP.

The following are some examples of actions that will extend the collections limitation period.

  • Actions you initiate
    • filing an assignment (bankruptcy or proposal) under the Bankruptcy and Insolvency Act, Farm Debt Mediation Act, or Companies’ Creditors Arrangement Act
    • becoming a non-resident of Canada after the CRA issues a notice of assessment or reassessment
    • filing a notice of objection
    • filing an appeal with the Tax Court of Canada
  • Actions the CRA initiates
    • accepting security instead of payment of a tax debt
    • postponing collection action without accepting security for an objected or appealed GST/HST debt
End of the collections limitation period

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.

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