What happens if I owe tax debt to the CRA?

Linda Stern
| 6/20/2022

Owing unpaid taxes to the Canada Revenue Agency (“CRA”) is one of the hardest debts to deal with and can be a stressful problem to face. Unlike most creditors, the CRA has the power to collect through harsher means such as garnishing your wages, registering a lien on your home, and freezing your bank accounts.

Our debt relief experts take an in-depth look at everything you need to know about owing tax money and how to handle your tax debts to the CRA.

Examples of individual tax debt

  • Tax DebtPersonal income tax debt
  • Harmonized Sales Tax (“HST”) owed by self-employed professionals and business owners
  • Early withdrawals of Registered Retirement Savings Plans (“RRSP”)
  • Director liability for payroll taxes that were withheld but not remitted to the CRA
  • Director liability for HST that the corporation collected, or should have been collected and not remitted to the CRA

What actions can the CRA take to collect tax debt?

  • Certify tax debt in the Federal Court of Canada and register a lien against the taxpayer’s home and other property
  • Issue wage garnishments against payroll
  • Freeze bank accounts
  • Set-off debt on income tax refunds, Goods and Services Tax (“GST”), Canada Child Benefit (“CCB”), etc.
  • Assess a director personally for unpaid corporate payroll and HST pursuant to the Income Tax Act (“ITA”)
  • Initiate seizure and sale action on real property and other investments
  • Issue a Notice of Assessment or Reassessment against a taxpayer “at any time,” pursuant to Section 160 of the ITA, for receipt of property from a non-arm’s length tax debtor for inadequate consideration

What are my options?

  • OptionsCommunicate with your accountant to ascertain whether filing a Notice of Objection with the CRA is advisable
  • Appeal with the Tax Court of Canada
  • Establish a repayment plan
  • File a Notice of Intention to Make a Proposal followed by a Proposal with a Licensed Insolvency Trustee (“LIT”) pursuant to the Bankruptcy and Insolvency Act (“BIA”)
  • File an Assignment in Bankruptcy with an LIT

Don’t face tax debt repayment alone.

At Crowe Soberman Inc., we help people and businesses across Toronto and Southern Ontario reduce debt.

Our local Licensed Insolvency Trustees can review your options for tax debt repayment and assess your financial situation with a free confidential consultation.

Reach out to one of our debt relief professionals to schedule your consultation or to discuss how the options above may be beneficial to you or your client.

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.

Contact Us

Linda Stern Crowe Soberman Toronto
Linda Stern
Senior Manager, Licensed Insolvency Trustee, Corporate Recovery & Turnaround, Personal Debt Solutions