CRA Collections

CRA Collections

Canada Revenue Agency (CRA) is given by the legislation the authority to collect any unpaid taxes.  What if you do not possess the sufficient funds to pay for your tax debt? Help is available!  Before CRA takes legal action, contact us urgently.  We can help you manage your tax debt by negotiating with CRA for an affordable payment plan. See Tax Payment Plan Negotiation

CRA will use all the avenues at its disposal to collect the unpaid taxes for the government. However, once an appeal or objection process starts, CRA will stop taking legal action. If you think that CRA assessed you with unfair taxes, you can appeal the decision or file a Notice of Objection.  Upon filing an objection, CRA will stop taking legal action. Notwithstanding, the interest charges will continue to accumulate for the duration that the debt remains unpaid. The deadlines for objections are very tight that require your prompt action. See Objections & Appeals 


What situations cause CRA to take legal action? 

CRA will take a legal action if you do not file your taxes and/or do not pay your tax debt.  Below are the most common situations giving rise to collections:

  • You haven’t paid personal or business taxes 
  • CRA did an arbitrary assessment on your back taxes
  • CRA reassessed your returns resulting in additional taxes, interest, and penalties
  • You have not filed or remitted the GST/HST 
  • You have not remitted the payroll source deductions.


Director’s liability

For the duration you hold the director position in a corporation, CRA will hold you accountable and personally liable for any unremitted payroll source deductions and GST/HST collected, even though you may no longer be the director.


When does CRA start collections?

CRA can start legal action if your tax debt remains unpaid 90 days from the mailing date of Notice of Assessment or Reassessment.   Before taking legal action, CRA will notify you by calling and sending a letter in the mail. 

To initiate a legal action, CRA is convinced that the taxpayer will not make the required payments in regular ways or through an approved payment plan arrangement.

Legal action can create complexities in your life. Aggressive collection agents will exert enormous pressure on you to get the monies that becomes too stressful to deal with.  Your credit background could be severely damaged.  It is in your best interest to take an immediate action to negotiate for a payment plan and remain committed to make timely payments from then on.


What methods does CRA use for collections? 

CRA can garnish your wages, freeze your bank account and seize the money, and put a lien on your property.  CRA can also prevent payment from other government agencies if you are the recipient of payments, for example, Canada Pension Plan.

Wage garnishment

CRA can order your employer to cut a significant portion of your wages until your taxes are fully paid.  Your employer is legally obliged to follow the order. The wage garnishment can have serious repercussions that can be avoided.  A wage garnishment can put you in a questionable position with your employer that could damage your career.  We can help you to avoid such negative results by negotiating with the CRA on your behalf for an affordable tax payment plan.

Bank freeze

CRA can put an order to freeze your account and seize the money.  Any monies flowing into your bank account will be redirected to the CRA to offset unpaid taxes.  Bank freeze would hinder your business activities by draining the cash in-flow.  An inability to pay the suppliers, for example, would cause operational failures or even eventual demise of your business.  No business owner would deserve such a devastating end. 

Liens

CRA can place a lien on the legal title to your property for the unpaid taxes.  Once the CRA places a lien, you will no longer be able to mortgage, remortgage, refinance or sell the property.  Usually, the only way to remove a lien is to pay off the tax debt.  

Some taxpayers may consider filing bankruptcy to avoid the tax debt.  In bankruptcy cases, all the assets and property of the taxpayer first must be liquidated. If the proceeds of the sale or liquidation are insufficient for the entire tax debt, then filing bankruptcy for the remaining debt portion may become an option.

Some taxpayers may consider transferring the property to family and friends to avoid taxes.  That is not suggested; existing laws can totally negate the effect of those transfers.  It is important to get legal advice before such actions.  


What should I do?

Ignoring your tax debt will not make it go away.  On the contrary, it will worsen your tax liabilities by each passing day with compounded interests accumulated daily and the penalties. Do not procrastinate and act today!


How can we help you?

We will get the full details of your taxes and financial circumstances.  Then, we will develop a strategic plan to achieve the best outcome possible given your limited budget and circumstances. We will start our vigorous negotiations with CRA right away and defend your position firmly to attain the CRA agreement for the best affordable plan with a goal to prevent the following:

  • Bank freeze on your  bank account
  • Wage garnishment & collections
  • Liens on property.


Contact us today to schedule a free, no-obligation, and confidential consultation. We have resolved the tax debt problems of many clients in the past; and we can resolve yours too.

Take advantage of our free, no-obligation consultancy session and improve your financial life by learning the complexities of your tax matters and the solutions from a professional!