The Canada Revenue Agency (the “CRA”) has some of the strongest collection powers compared to other creditors such as credit card companies, banks, or utility and cell phone providers. The CRA has the ability to use any number of collection actions without having to take you to court first. The CRA has powers to pursue collections of tax related debts through wage garnishments, freezing of bank accounts, investment seizures, or even the registering a lien on a residential home. This article will focus on the latter item.
For any tax debt owed to Her Majesty (the “Crown”) that has not been paid by a tax debtor (the “debtor”), the CRA may obtain a certificate against the tax debtor. A certificate is certified by the Minister of National Revenue as the total amount payable by the debtor. The certificate is then registered in the Federal Court of Canada (the “Court”). Once the certificate is registered in the Court, the certificate is deemed to be a judgement obtained in the Court against the debtor.
Frequently, the certificate is used as an instrument for a charge or lien (the “lien”) against the interest of the debtor in his or her residential home. This certificate or lien, like any other balance due to CRA, continues to accrue interest over time at a prescribed rate pursuant to Section 161 of the Income Tax Act until the amount is fully paid. This CRA lien will not be deleted off the land registry until the amount payable is fully satisfied together with interest.
If the CRA has already issued a certificate/lien against you, or you owe tax debts to CRA that you cannot repay, contact our office for a free confidential consultation. We can work with you to arrange a repayment plan with CRA.
- For the related Income Tax Act sections, please check Section 223 of ITA and Section 161 of ITA.
- Click here to view the CRA prescribed rate of interest 2016 third calendar quarter.
- Download a sample of the Notice of Lien.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Please note that this publication should not be considered a substitute for personalized tax advice related to your particular situation.
