The CRA’s collection procedures

If you cannot afford to pay your taxes owing, you should still file your return on time. Filing late can incur significant penalties and interest (see topic 171).

In most cases, the CRA cannot begin legal proceedings to collect until 90 days after the day on which the Notice of Assessment was mailed. There are further delays if you file a Notice of Objection or otherwise indicate that you’re objecting to the assessment. Nevertheless, interest is charged that compounds daily to the date of payment.

The CRA will make every effort to contact you before beginning formal legal proceedings, but it would be prudent for you to contact the CRA if you’re unable to pay the full amount. Depending on your circumstances, a schedule of payments over a period of time will normally be accepted. If you don’t pay, the CRA has the power to seize funds from your bank account or require your employer to pay a portion of your salary directly toward your taxes owing.

Limitation period for collection of tax debts

There is a 10-year limitation period for the collection of income tax debts. For all federal tax debts and any other amounts that became payable before March 4, 2004, but remained unpaid at that date, this 10-year limitation period commenced on March 4, 2004. For debts that become payable after this date, the limitation period is 10 years.