CRA Requirement to File Orders: What Happens When You Don’t File Your Tax Returns — Estimated Assessments, Enforcement, Penalties, and How to Fix It (Montreal CPA Firm Guide)

One of the most serious warnings CRA can issue is a Requirement to File (RTF) order. This is an official legal notice demanding that you file missing tax returns by a specific deadline.
If you ignore an RTF, CRA can legally assess your income without your input, create an estimated tax debt, charge interest and penalties, freeze your bank account, garnish wages, seize refunds, or refer you to criminal investigations for repeated non-filing.
Many taxpayers underestimate how damaging missing returns can be. For CRA, unfiled returns are one of the highest enforcement triggers—and often the starting point for audits, collections, and long-term financial problems.
This guide explains why CRA issues RTF orders, what legal powers they use, how estimated assessments work, and how Mackisen can fix non-filing issues quickly and safely.

Legal and Regulatory Framework

CRA’s authority to demand tax returns comes from the Income Tax Act, which states that:
• every taxpayer must file a return when required
• CRA can issue a Requirement to File order to anyone who has unfiled years
• CRA can assess a taxpayer using assumptions when returns are not filed
• CRA’s estimated assessment is legally enforceable
• CRA can refer chronic non-filers to criminal investigations
• penalties and interest begin even without an actual return

CRA does not need to prove income—only that the return is required.

Key Court Decisions

Courts have repeatedly confirmed CRA’s strong powers regarding non-filers:
• CRA can issue an estimated assessment when a taxpayer fails to file
• the burden shifts to the taxpayer to disprove CRA’s assumptions
• repeated non-filing can result in criminal prosecution
• interest and penalties apply even when the tax assessed is estimated
• CRA can use lifestyle audits, bank deposit analysis, or net-worth methods
• objections cannot stop enforcement when GST/QST or payroll remittances are involved
• courts rarely remove penalties unless clear exceptional circumstances exist

Judges consistently rule that filing a return is a legal obligation—not a choice.

Why CRA Issues Requirement to File Orders

CRA sends RTFs when it identifies risk indicators such as:
• missing one or more tax returns
• unexplained income activity
• real estate transactions
• GST/QST accounts with no annual filings
• payroll accounts with employees but no T4s
• high-value bank deposits
• foreign income signals
• large rental or investment activity
• self-employed or incorporated taxpayers
• CRA audit referrals due to non-reporting

Non-filing is viewed as deliberate avoidance unless proven otherwise.

How CRA Enforces Requirement to File Orders (Deep Expansion)

1. Estimated Assessments

If you ignore the RTF, CRA will create its own assessment using:
• bank deposit analysis
• third-party data (banks, employers, real estate records)
• lifestyle or net-worth audits
• industry average income
• previous tax filings
• GST/QST filings
• payroll slips
• real estate sales or investments
• credit card statements

These estimates are often MUCH higher than the actual income.

2. Interest and Penalties

CRA charges:
• late-filing penalties
• repeated failure-to-file penalties
• compound daily interest
• instalment penalties
• gross negligence penalties in some cases
• unreported income penalties

Once assessed, interest cannot be stopped without filing corrected returns.

3. Collections Enforcement

After an estimated assessment, CRA can:
• freeze bank accounts
• garnish wages
• seize tax refunds
• redirect client payments
• register liens
• intercept GST/QST refunds
• escalate to audits
• refer to criminal investigations

Estimated assessments give CRA the same enforcement power as real ones.

4. Criminal Non-Filer Investigations

CRA may escalate if:
• multiple years remain unfiled
• high income is suspected
• the taxpayer ignores multiple RTF orders
• GST/QST or payroll accounts exist
• the taxpayer is self-employed, incorporated, or owns rental properties

This is rare but extremely serious.

Immediate Financial Risks

Missing returns can trigger:
• large unexpected tax balances
• thousands in penalties
• bank freezes
• seized refunds
• wage garnishments
• CRA liens on property
• credit problems
• loss of GST/QST refunds
• payroll audits
• business shutdowns

Many taxpayers do not realize that filing late is far more dangerous than filing and owing.

Mackisen Strategy

Mackisen CPA uses a proven, structured approach to fix non-filing issues and reverse CRA enforcement.

Step 1 — Full File Reconstruction

We identify:
• missing years
• CRA internal records
• employer slips and rental information
• GST/QST filings
• payroll activity
• real estate transactions
• bank deposit summaries
• investment accounts

We rebuild the entire tax history accurately.

Step 2 — Prepare and File All Missing Returns

We fast-track:
• personal T1 returns
• corporate T2 returns
• GST/QST filings
• payroll slips
• rental schedules
• investment summaries
• business income
• capital gains calculations

Filing returns is the only way to replace CRA’s estimated assessments.

Step 3 — Challenge Incorrect Assessments

We file:
• Notices of Objection
• requests for recalculation
• amendments for missed credits
• taxpayer relief for penalties

Correcting assessment errors may reduce the balance significantly.

Step 4 — Stop Collections

We negotiate:
• pauses on enforcement
• conditional freeze removal
• instalment plans
• reduced penalties
• time extensions
• protection during objections

This stabilizes the taxpayer immediately.

Step 5 — Long-Term Compliance Plan

We ensure:
• future filings are on time
• GST/QST returns align
• payroll filings are complete
• instalments are calculated correctly
• CRA communication is handled by Mackisen

This prevents future RTFs and audits.

Real Client Experience

A Montreal contractor had not filed four years of personal taxes or two years of GST/QST returns. CRA issued an RTF, followed by an estimated assessment of more than $94,000. Mackisen reconstructed income using bank statements, corrected errors, filed all returns, reduced the actual tax to less than $14,000, negotiated penalty relief, and stopped enforcement.

Another client, a real estate investor, had multiple unfiled years despite owning three properties. CRA issued estimated assessments and liens. Mackisen filed all returns, recalculated rental income, reduced the assessments, and secured lien removal after repayment.

Common Questions

• Can CRA force me to file? Yes.
• Can CRA guess my income? Yes.
• Can CRA freeze my bank account for unfiled returns? Yes.
• Can I go to jail for not filing? In extreme, repeated cases, yes.
• Can CRA seize my refund for missing returns? Yes.
• Do objections stop enforcement? No, unless the debt is income tax only.
• Can CRA lien my house if I don’t file? Yes.
• How many years must I file? CRA usually requires all years with income.

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.