CRA Audit Reassessment Collections: What Happens After a CRA Audit Raises Your Tax Bill — Enforcement, Penalties, Objections, and How to Stop Collections (Montreal CPA Firm Guide)

A CRA audit reassessment is stressful enough—but many taxpayers don’t realize that as soon as CRA reassesses, the debt becomes collectible immediately. CRA does not wait for you to object.
If you disagree with the reassessment, the dispute process continues, but CRA Collections can still seize refunds, freeze bank accounts, garnish wages, intercept payments, place liens, and escalate enforcement—unless the tax is strictly income tax and you file a timely objection.
GST/QST, payroll, director liability, and trust-fund assessments remain collectible even during objections.
This guide explains how CRA reassessments lead to collections, what legal rights you have, and what steps Mackisen takes to protect you from enforcement while resolving the dispute.

Legal and Regulatory Framework

CRA’s authority to collect reassessed tax balances comes from the Income Tax Act and the Excise Tax Act.
After an audit:
• CRA issues a Notice of Reassessment
• the balance becomes immediately payable
• interest begins to accrue daily
• GST/QST, payroll, and trust funds remain fully enforceable
• objections do not automatically pause collections except for income tax
• CRA can initiate full enforcement after 90 days
• CRA may escalate faster for high-risk files

CRA considers reassessed amounts “legally owing,” even if the taxpayer disagrees.

Key Court Decisions

Courts have consistently confirmed:
• CRA may collect disputed taxes unless the law provides automatic relief
• only income tax collections pause after a valid objection is filed
• GST/QST and payroll remain collectible during disputes
• CRA does not need court approval to enforce reassessments
• taxpayers must prove the reassessment is wrong—not CRA
• interest is mandatory and cannot be cancelled due to hardship
• CRA can base assessments on assumptions, which taxpayers must disprove

These rulings reinforce the seriousness of reassessment collections.

Why CRA Sends Files to Collections After a Reassessment

CRA escalates reassessment files when risk indicators appear, including:
• large increases in assessed income
• denied deductions or credits
• unreported income
• invalid GST/QST input tax credits
• missing records or incomplete bookkeeping
• lifestyle or net-worth discrepancies
• payroll irregularities
• repeated late filings
• inconsistent business income
• rental or real estate reporting issues
• crypto or investment income mismatches

Audit reassessments almost always lead to stronger collections scrutiny.

How CRA Enforces Reassessed Balances (Deep Expansion)

1. Collection Notices & Account Statements

CRA begins by sending:
• Notice of Reassessment
• formal CRA collection letters
• phone calls from collections officers
• escalating written demands

This phase is short—often less than 30 days.

2. Refund Seizures (Offsets)

CRA immediately applies:
• personal tax refunds
• corporate refunds
• GST/QST refunds
• tax credits or incentives

This is automatic.

3. Bank Account Freezes

CRA may issue Requirements to Pay to banks.
This action:
• freezes the account
• redirects funds to CRA
• stops normal operations
• creates NSF fees
• triggers supplier credit holds

4. Wage Garnishments

CRA can seize a portion of wages or contractor income.

5. Seizure of Accounts Receivable

CRA sends RTPs to:
• clients
• customers
• payment processors
• e-commerce platforms
• property managers

This destroys business cash flow.

6. Federal Court Certificates & Liens

CRA may register the reassessed debt in Federal Court, then place liens on:
• homes
• investment properties
• rental portfolios
• business assets

7. GST/QST & Payroll Trust Fund Enforcement

For trust amounts, CRA skips negotiation and goes straight to aggressive enforcement.

Immediate Financial Risks

Reassessments can create severe financial instability, including:
• tens of thousands in interest
• cash flow collapse
• frozen operating accounts
• seized refunds
• garnishments against income
• real estate refinancing delays
• business credit restrictions
• supplier holds
• CRA escalating to audits in other areas
• director liability exposure

Most taxpayers underestimate how quickly this escalates.

Mackisen Strategy

Mackisen CPA uses a dual-track strategy:

1. fight the reassessment, and

2. stop CRA enforcement at the same time.

Step 1 — Audit Reassessment Review

We analyze:
• CRA’s audit assumptions
• denied expenses
• banking or net-worth calculations
• industry ratio errors
• missing or misunderstood documents
• GST/QST input tax credit issues
• personal vs business expenses
• payroll discrepancies

Most audit reassessments contain errors that can be challenged.

Step 2 — Prepare the Objection

We file a detailed Notice of Objection including:
• legal arguments
• factual errors
• evidence and documentation
• case law support
• financial reconstruction
• CPA calculations and schedules
• audit methodology challenges

This protects your legal rights immediately.

Step 3 — Stop or Pause Collections

We contact CRA Collections to:
• confirm balances
• stop or pause enforcement
• prevent freezes or garnishments
• negotiate temporary relief
• defer collections on income tax
• request a taxpayer relief review
• request a collections hold pending review

This prevents crisis escalation.

Step 4 — Reconstruct Financial Evidence

We prepare:
• new bookkeeping
• corrected GST/QST claims
• investment schedules
• rental income statements
• business expense reconciliation
• bank deposit analysis
• net-worth reconstruction

Proper documentation is the key to reversing reassessments.

Step 5 — Negotiate with CRA Appeals

We engage CRA Appeals to:
• reduce or correct the balance
• reverse incorrect assumptions
• allow additional business expenses
• accept proper documentation
• remove penalties where possible

CRA Appeals is significantly more reasonable than the audit division.

Step 6 — Long-Term Compliance Plan

We create systems to prevent future reassessments:
• monthly bookkeeping
• GST/QST tracking
• payroll compliance
• instalment planning
• CRA correspondence monitoring
• audit defence preparation

This protects taxpayers permanently.

Real Client Experience

A Montreal consultant was reassessed $63,000 after CRA denied business expenses and added “unreported deposits” to income. CRA immediately seized tax refunds and placed the file under active collections. Mackisen filed a detailed objection, reconstructed the financial records, corrected GST/QST filings, and proved most deposits were non-taxable transfers. The assessment was reduced to $6,800. Collections were paused during the appeal.

Another client, a contractor, faced a reassessment of $148,000 after a GST/QST audit. CRA froze the business bank account. Mackisen intervened the same day, negotiated a freeze lift, filed an objection, and challenged input tax credit denials. The reassessment was reduced by 72 percent.

Common Questions

• Can CRA collect tax while I am disputing it? Yes, except for income tax with a valid objection.
• Can CRA freeze my bank account after a reassessment? Yes.
• How long do I have to file an objection? 90 days.
• Can CRA seize refunds during a dispute? Yes.
• Does CRA Appeals stop collections? Only sometimes.
• Is an audit reassessment final? No—it can be reversed with evidence.
• Can I negotiate a payment plan while objecting? Yes.
• Do objections stop GST/QST enforcement? No.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.