Failure to pay amounts deemed to be held in trust

As an employer, you are deemed to hold in trust, amounts that are deducted from employees and other individuals for:

  • income tax
  • Canada Pension Plan (CPP) contributions
  • employment insurance (EI) premiums

In addition, you must also include your portion of CPP and EI when you remit deductions. If you do not remit these deductions, we will assess you the amount owing and ask you to pay the full balance immediately, including any penalties and interest that apply.

If you do not pay the balance owing, we may, at the time we issue a notice of assessment, begin legal action to:

  • garnish wages or other income sources
  • seize and sell assets
  • use any other means under any applicable statutes or laws to collect an amount owing

Garnishment action allows us to intercept funds payable to you by a third party, such as wages or other income sources, or from any other federal government department owing you money.

We can also register a certificate in the Federal Court of Canada for unpaid amounts. Once registered, the certificate has the same force and effect as a judgment obtained in the Court. When the debt is certified, we will usually notify you by mail. If you still do not pay the amount, we may get a writ or memorial and seize assets and/or property, and have it advertised and sold by the sheriff.

For more information, see "Trust funds" and "Legal action to collect" in Information Circular IC98-1R7, Tax collections policies, or go to Information on deemed trusts.

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