CRA Collections and Payment Arrangements: Options When You Owe Tax

If you owe the Canada Revenue Agency money and cannot pay it all at once, the CRA expects you to contact it, and it offers a CRA payment arrangement for many kinds of debt. If you do not pay and do not call, collections escalates from letters to a legal warning and then to tools such as garnishment. This guide explains the steps, the actions the CRA can take, how long it can pursue a debt and how the process compares with IRS collection, which matters for readers who owe tax in both countries.

How does CRA collections work?

When a balance remains unpaid, the CRA collections process moves from reminders to a legal warning. Before legal action, the CRA says it generally makes at least one attempt to give a verbal legal warning by phone and sends one written legal warning letter, and a legal warning is valid for 180 days. For payroll and GST/HST remittance debts, legal action may begin right after you are notified of your debt. Take any letter from a collections officer seriously and call as soon as possible.

If your debt stays unpaid and you have no acceptable arrangement, the CRA may:

• garnish your income and accounts, by sending a requirement to pay (RTP), enhanced requirement to pay or a demand on a third party to an employer, bank, spouse, business partner or government department
• redirect federal payments owed to you through set-off, which can include CPP or OAS payments, federal contract payments or a federal employee's pay
• apply refunds and benefit payments, such as the Canada Groceries and Essentials Benefit, to your balance
• make another person or entity jointly liable for the debt
• put a lien on or seize and sell your assets
• apply to court for a jeopardy order if it believes the debt may not be collected

Always verify that contact is genuine. The CRA does not demand payment by gift card, cryptocurrency or e-transfer; see scam alerts for the IRS, CRA and India.

How to set up a CRA payment arrangement

1. Gather information. Have your SIN or business number, name, date of birth, address and your latest notice of assessment or reassessment, or access to your CRA account.
2. Work out what you can pay. The CRA suggests using its personal income and expense worksheet to decide what you can afford regularly.
3. Choose the route. Online, sign in to My Account, My Business Account or Represent a Client and schedule pre-authorized debit (PAD) payments. By phone, speak to a CRA agent; an automated TeleArrangement service exists for personal income tax debt only. Other debt types, such as other overpayments, must be arranged by phone. Business representatives cannot use the online scheduling; representatives of individuals can use Represent a Client.
4. Start the payments. Keep to the agreed dates. The CRA may review the arrangement periodically.
5. File future returns on time. The CRA tells you to file on time while an arrangement is in place.
6. Change it before you miss a payment. If you pay less than agreed without first changing the arrangement, the CRA may proceed with legal actions to collect.

Even with an arrangement, the CRA says it may use some benefits and other credit payments you receive to pay your debt. Interest is separate; see CRA penalties and interest.

How long can the CRA collect?

The CRA says it can collect individual tax, corporate tax and some COVID-19 subsidy debts for 10 years, starting on the 91st day after a notice or notice of assessment or reassessment is sent. GST/HST remittance debts have a 10-year period starting the day after the notice. The CRA says it can collect for either six or 10 years depending on the debt type.

Certain actions restart the period, including a voluntary payment, a written proposal for a payment arrangement or a written acknowledgement of the debt, a written request for reassessment, a notice of objection, an appeal, and CRA actions such as garnishment, set-off or applying a refund. Other events extend it, such as bankruptcy or a proposal, and becoming a non-resident of Canada after an assessment is issued. After the period ends, the CRA usually cannot take further collection action, but the debt still exists and voluntary payments are still possible. CPP and OAS debts have no limitation period.

Can I stop collection by disputing the debt?

The CRA says that for income tax objections collection is normally postponed until 90 days after it sends its decision, with exceptions such as amounts you were required to withhold and remit, and amounts in jeopardy. Large corporations must pay 50 percent of the disputed amount when they object. For appeals, collection is normally postponed until the Tax Court of Canada decides, and interest continues to accrue. Some business debts continue to be collected even during an objection. See objections and appeals.

If you cannot pay because of financial hardship, the CRA can consider cancelling or waiving interest once it confirms you are unable to pay, as part of its taxpayer relief provisions.

How CRA collection compares with the IRS

If you owe both governments, keep both on payment schedules and track each deadline separately. A US citizen in Canada or a Canadian resident with US tax should coordinate foreign tax credits so the same tax is not paid twice; see US citizens living in Canada.

A worked example

Neha, a Toronto resident, receives a notice of reassessment for $14,000 in July 2026 and cannot pay it at once. She signs in to her CRA account, schedules monthly PAD payments of $1,200, and files her next return on time. Her Canadian CPA also asks the CRA to cancel part of the interest because of documented medical expenses during the filing period, a request the CRA considers case by case. The CRA applies her GST/HST credit to the balance while the arrangement continues, so her balance falls faster than her payments alone. She keeps the payment confirmations. The numbers are hypothetical.

Mistakes to avoid

• Ignoring collections letters and waiting for the legal warning.
• Paying less than agreed without calling.
• Assuming an arrangement stops benefit offsets.
• Filing future returns late, which can break the arrangement.
• Overlooking that moving out of Canada can extend the collection period.

How we can help

We do not represent clients before the CRA and do not negotiate with CRA collections. Your Canadian CPA or tax lawyer sets up the arrangement and any relief request. From our Aurora, Illinois area base, we help with the U.S. side: aligning your IRS payments, foreign tax credits and any US amended return, and coordinating with your Canadian professional so cash flow across the two systems is planned. No outcome is guaranteed. See cross-border tax and CRA online services. Browse the notices hub for every guide in this series.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.