CRA Requirement to Pay Notices: What They Are and How to Respond – A Complete Guide by a Montreal CPA Firm Near You

Introduction

A CRA Requirement to Pay (RTP) is one of the most powerful and disruptive collection tools used by the Canada Revenue Agency. When CRA sends an RTP, they are ordering a third party—such as your bank, employer, clients, tenants, or payment processors—to send money directly to CRA instead of to you. This can freeze your bank account, garnish your wages, seize rental income, or intercept business payments overnight. Many taxpayers panic when they receive an RTP, but with the right strategy, you can stop, reverse, or negotiate its impact. This guide explains what RTPs are, why CRA issues them, and how to respond immediately to protect your finances.

Legal and Regulatory Framework

CRA’s authority to issue an RTP comes from:

• Section 224(1) of the Income Tax Act

• Section 317 of the Excise Tax Act (GST/HST)

• Tax Administration Act (Quebec) equivalents
  These laws allow CRA to legally compel third parties to send funds to CRA without a court order. An RTP is enforceable immediately upon receipt and remains active until the full debt is paid or CRA lifts it. CRA issues RTPs for unpaid income tax, GST/HST, payroll deductions, director’s liability debts, and reassessment balances.

Key Court Decisions

In McKinlay Transport v. Canada, the Supreme Court upheld CRA’s broad power to collect tax debts without court approval. In Samuel, Son & Co. v. Canada, the Federal Court confirmed that RTPs are legally binding on third parties and that ignoring them can result in penalties. In Rennie v. Canada, CRA was ordered to consider financial hardship when negotiating payment arrangements, but RTPs remained valid. These cases show that RTPs are powerful, lawful, and urgent.

What Is a Requirement to Pay (RTP)?

An RTP is a legally binding notice sent to a third party requiring them to give CRA money that would otherwise be paid to you. CRA can issue RTPs to:

• Banks (freezing available funds)

• Employers (garnishing wages)

• Clients/customers (redirecting payments)

• Merchant processors (Stripe, PayPal, Square)

• Tenants (seizing rental income)

• Law firms or real estate brokers holding funds
  An RTP is extremely disruptive and often unexpected because CRA does not need your consent or a court order.

Why CRA Issues RTPs

CRA issues RTPs when taxpayers: ignore collection letters, miss payments, default on arrangements, fail to file required returns, have outstanding GST/HST or payroll debts, fail director’s liability obligations, or do not respond to CRA collectors. CRA uses RTPs when they believe voluntary payment will not be made.

Types of RTPs

1. Bank RTP

Freezes your account and sends available funds to CRA. You lose immediate access to money.

2. Wage Garnishment RTP

Sent to your employer. CRA can seize:

• Up to 50% of employment income

• Up to 100% of contract/self-employment income

3. Client RTP (for businesses)

CRA orders your clients to pay them directly. This is devastating for contractors and small businesses.

4. Tenant RTP

CRA can intercept rental income directly from tenants.

What Happens When an RTP Is Issued

Your bank account may be frozen.
Your employer is legally required to comply.
Your clients may be forced to pay CRA instead of you.
Your credit score may be affected indirectly.
Your cash flow may collapse within 24 hours.
CRA continues enforcement until the debt is paid.

Immediate Steps to Take When You Receive an RTP

1. Contact a CPA Immediately

Do not call CRA alone—anything you say can affect your case.

2. Verify the Debt

Errors happen. Assessments may be wrong or outdated.

3. Request an Immediate Hold on Collections

Your representative can request a temporary hold while negotiating.

4. File Any Missing Returns

CRA will not lift an RTP until all filings are up to date.

5. Negotiate a Payment Arrangement

A realistic payment plan can reduce or remove the RTP.

6. Submit a Taxpayer Relief Request (if applicable)

Interest and penalties may be waived for hardship or extraordinary circumstances.

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

Objections pause income tax collections.

How to Lift or Reduce an RTP

CRA may lift or modify the RTP if:

• A payment plan is approved

• taxpayer proves financial hardship

• debt amount is incorrect

• objection has been filed (for income tax debts)

• taxpayer demonstrates inability to meet basic living expenses
  Professional negotiation is essential.

If You Do Nothing

CRA can expand RTPs to:

• additional bank accounts

• new employers or clients

• your spouse’s accounts (if joint)

• future tax refunds
  Ignoring RTPs increases enforcement severity.

How to Prevent RTPs in the Future

Stay current with filings, set up installment payments, maintain regular communication with CRA, correct assessments through objections or VDP, avoid missing GST/HST or payroll remittances, and seek CPA help as soon as financial difficulty begins.

Mackisen Strategy

At Mackisen CPA Montreal, we intervene immediately to stop or reduce RTPs. We contact CRA Collections directly, negotiate payment terms, correct erroneous assessments, file objections where needed, prepare hardship documentation, and rebuild financial compliance. Our rapid response often results in RTP removal within days.

Real Client Experience

A Montreal contractor had a 100% client RTP lifted after we negotiated a structured payment plan. A retiree had wage garnishment reduced from 50% to 10% through hardship documentation. A landlord avoided tenant garnishment by catching up on GST filings. A business owner had their bank account unfrozen within 48 hours after CRA accepted our proposal.

Common Questions

Can CRA freeze my account without warning? Yes. Can I stop wage garnishment? Yes—with negotiation or objection. Do RTPs affect credit scores? Indirectly, through bounced payments. Can CRA issue multiple RTPs? Yes.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal protects taxpayers from the financial damage caused by CRA RTPs. We negotiate aggressively, correct errors quickly, and restore financial stability with strategic representation.