CRA Collections and Payment Plans

Introduction
Understanding CRA collections and payment plans is essential for individuals, self-employed Canadians, corporations and anyone who owes tax balances to the Canada Revenue Agency or Revenu Québec. Once a tax debt becomes collectible, CRA Collections can take aggressive action—garnishing wages, freezing bank accounts, seizing refunds, intercepting GST credits and placing liens on property. Many Canadians panic when they receive a collections letter, but in reality, CRA offers structured payment arrangements, relief options and negotiation pathways—if handled correctly. This guide explains how CRA collections and payment plans work, your rights during collections, and how to avoid harsh enforcement actions.

Legal and Regulatory Framework
CRA collections and payment plans operate under:

• the Income Tax Act
• the Excise Tax Act (GST/HST)
• the Tax Administration Act (Québec)
• debtor-relief legislation
• CRA Collections Policy
• Revenu Québec Collections Policy
• court decisions on taxpayer rights

CRA Collections may act without a court order, making tax debt one of the most powerful forms of government enforcement.

Revenu Québec has even stronger powers, especially for QST and payroll deductions.

CRA collections and payment plans give taxpayers practical options—if negotiations begin early.

When Tax Debt Enters Collections

Tax debt becomes collectible when:

• a Notice of Assessment or Reassessment has been issued
• the taxpayer’s due date has passed
• no objection has been filed (or the objection applies only to the disputed amount)

Once the file enters CRA collections and payment plans territory, the collections department—not auditors—controls your account.

If the debt involves source deductions (payroll), CRA may begin enforcement immediately.

Revenu Québec has shorter timelines and often moves faster.

What CRA Collections Can Do

CRA has powerful tools to enforce tax debt, including the ability to:

• garnish wages or contract payments
• freeze bank accounts
• withhold tax refunds
• seize GST/HST/QST credits
• register liens on property
• intercept payments from customers
• seize accounts receivable
• seize assets (rare but possible)

CRA does not need a court order—unlike other creditors.

Understanding CRA collections and payment plans helps taxpayers act before these measures occur.

Your Rights During CRA Collections

Taxpayers have important rights:

• the right to a reasonable payment plan
• the right to professional representation
• the right to privacy
• the right to object to assessments (collection may pause)
• the right to fair treatment
• the right to financial hardship consideration

CRA must consider your ability to pay and offer a payment arrangement when reasonable.

Revenu Québec must also negotiate payment plans but typically demands tighter schedules.

CRA Payment Plan Options

1. Standard CRA Payment Arrangement

A payment plan where the taxpayer pays tax debt in monthly installments.

CRA considers:

• income
• expenses
• family obligations
• total debt
• ability to pay over time

The plan may span several months to a few years.

2. Extended Payment Arrangement

Available when taxpayers demonstrate financial hardship through:

• income/expense analysis
• medical costs
• reduced earnings
• business downturn
• family emergencies

Supporting documentation strengthens your case.

3. Voluntary Payments

Taxpayers may make additional payments to reduce interest.

4. Temporary Collection Relief

CRA may pause collections when:

• serious illness occurs
• natural disaster affects the taxpayer
• financial hardship eliminates ability to pay

Interest continues, but enforcement stops temporarily.

Revenu Québec (ARQ) Payment Plans

Revenu Québec Collections acts faster and is stricter.

ARQ can:

• seize bank accounts
• garnish wages
• place property liens
• intercept government benefits

Payment plans must align with ARQ’s aggressive timelines.
Unlike CRA, ARQ may require detailed budgeting and financial disclosure for approval.

Understanding CRA collections and payment plans also means understanding ARQ procedures.

Strategies to Stop CRA Collections Fast

1. File a Notice of Objection (if reassessment is incorrect)

This pauses collections for income tax—but not for GST/HST or payroll debt.

2. Request a Payment Arrangement Immediately

Faster communication = less enforcement.

3. Provide a Financial Disclosure Statement

This shows ability to pay and prevents unreasonable demands.

4. Pay What You Can Right Away

Any payment reduces interest and shows good faith.

5. Apply for Taxpayer Relief (Penalty/Interest Reduction)

If penalties were caused by extraordinary circumstances, CRA may waive them.

6. Use a CPA as Your Representative

CRA and ARQ behave more professionally when taxpayers have representation.

Key Court Decisions

Courts have held that:

• CRA collections must act reasonably and fairly
• payment plans must consider taxpayer circumstances
• CRA does not need court orders for garnishments
• taxpayers may challenge unreasonable CRA actions
• directors can be personally liable for payroll tax debt
• ARQ has legal authority to enforce QST collections aggressively

These decisions reinforce the seriousness of CRA collections and payment plans.

Mackisen Strategy

Mackisen CPA offers full representation for CRA collections and payment plans:

• contacting CRA/ARQ on your behalf
• negotiating monthly payment plans
• preparing financial disclosure statements
• preventing bank freezes and garnishments
• resolving GST/HST and QST collections
• handling payroll liability collection
• drafting taxpayer relief applications
• filing objections to stop unfair collections
• advising on repayment schedules
• managing communication so you never speak directly with collectors

This removes pressure and protects your finances.

Real Client Experience

Examples of how Mackisen solved collections problems:

• A contractor’s bank account was frozen due to GST arrears. We negotiated a release and set up a payment plan.
• A Québec taxpayer had wages garnished. Mackisen arranged a rapid modification and reduced garnishment rate.
• A restaurant owner owed payroll deductions. CRA was preparing legal action. We intervened and negotiated extended terms.
• A freelancer received aggressive ARQ calls for QST debt. We handled all communication and secured a 24-month arrangement.
• A business had an unrealistic CRA demand for immediate payment. Mackisen submitted financial analysis and obtained an affordable plan.

These cases show the power of professional support.

Common Questions

• Can CRA seize my bank account?
Yes—without a court order.

• Can I negotiate a payment plan?
Yes—CRA must consider reasonable arrangements.

• Can CRA forgive my tax debt?
No—but penalties/interest can be reduced.

• Will interest stop if I make a payment plan?
No—interest continues until debt is paid.

• Can CRA take my house?
Rare, but a lien can be placed on real estate.

• Do payment plans affect credit?
CRA collections do not report to credit bureaus.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps taxpayers resolve tax debt safely and strategically. Whether you are dealing with CRA collections and payment plans or aggressive Revenu Québec enforcement, our expert team negotiates fair arrangements, prevents garnishments, defends your rights and protects your financial stability.