If you don't pay your debt – Debt collection at the CRA
There are consequences if you don't pay your taxes or other debts when they are due.
If you need to call us about a debt you can't pay in full or on time, or want to set up an arrangement to make smaller payments over time, refer to: Arrange to pay your debt over time.
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Interest and penalties you could be charged
We charge interest on most unpaid balances owing. In some cases, there might also be penalties associated with filing a late return or missing a payment deadline.
Offsets from refunds or other government payments
We apply tax refunds and government credit or benefit payments you should receive (such as the GST/HST credit) to your balance owing.
How we will notify you when we begin taking action
If you have a debt and haven't confirmed arrangements to pay it, or if you don't make your scheduled payments on time, we may begin legal actions.
Before we start legal actions, we will generally:
- Make up to 3 attempts to give you a verbal legal warning by phone
- Send 1 written legal warning letter
However, if your business owes a payroll or GST/HST remittance debt, we may begin legal actions right after you are notified of your debt.
In some situations, we may decide there is a risk of not collecting all or part of your tax or COVID-19 business subsidy debt while it is still under collections restrictions. We can apply to the Federal Court or the superior court of a province for a jeopardy order. This allows the CRA to take immediate legal actions to collect the debt.
Refer to: Collection of tax debts in jeopardy
Business debts and COVID-19 business subsidy debts
For GST/HST remittance and payroll deduction debts, the notice of assessment or reassessment is considered the written legal warning for amounts owing. Once a verbal legal warning is attempted, the CRA can proceed with legal actions. The CRA can continue to collect amounts assessed on corporate accounts even if you filed an objection or an appeal to the Tax Court.
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 corporate tax, GST/HST remittance, payroll, and COVID-19 business subsidy debts, set-offs can be issued as soon as a notice of determination/assessment has been sent.
Validity period
A legal warning is valid for 180 days. The CRA can start legal action at any time during this period even if the balance changes.
To renew a legal warning after the first 180 day period has expired without any legal action taken, the CRA is required to give only one legal warning, either verbal or written.
The legal warning period does not expire even when there is ongoing legal action.
Make sure it's really the CRA contacting you
If you receive a call about a CRA balance owing or a debt collected by the CRA that you never saw on a Notice of Assessment, Notice of Reassessment, Notice of Determination, notice of Debt, or another notice:
- Verify if the caller is really a CRA employee
- Check your balance on your online CRA account or by calling us
To learn more about what a CRA agent will and will not do, refer to: What to expect when the CRA contacts you
Legal actions we may take
Depending on your situation, there are different legal actions the CRA might take.
- Garnishing your income and accounts
- Making another person or entity also responsible for your debt
- Putting a lien on or seizing your assets
For more about how much time the CRA has to collect debts, refer to: How long a debt can be collected
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