CRA Wage Garnishments: How the CRA Can Take Up to 50% of Your Paycheque — And How to Stop It Immediately (Montreal CPA Firm Guide)

A CRA wage garnishment is one of the most aggressive collection measures in Canada. When CRA issues a Requirement to Pay to your employer, client, platform, or contract payer, they must legally redirect a portion of your pay directly to CRA—before it ever reaches your bank account.
For employees, this can remove up to 50 percent of net pay.
For self-employed individuals and contractors, CRA may take up to 100 percent of incoming payments.
This guide explains why CRA garnishes income, the legal rules behind it, how employers must comply, and the exact steps required to reduce, stop, or reverse a CRA garnishment.

Legal and Regulatory Framework

CRA has the authority to garnish wages under the Income Tax Act, the Excise Tax Act, and related federal legislation. CRA can issue garnishments without a court order.
The law requires that:
• employers must withhold the specified portion of wages
• contractors, clients, and digital platforms must redirect payments to CRA
• CRA sets the percentage based on internal policy, not taxpayer affordability
• garnishment continues until CRA issues a formal cancellation
• financial hardship does not automatically stop a garnishment
• filing an objection stops garnishment only for income tax, never GST/QST or payroll source deductions

CRA may garnish wages from multiple sources at the same time.

Key Court Decisions

Courts have repeatedly upheld the legality of CRA wage garnishments, confirming that:
• CRA is not required to negotiate before garnishing income
• the taxpayer must challenge the underlying assessment, not the garnishment itself
• garnishments remain valid even when taxpayers suffer extreme hardship
• the percentage CRA chooses is rarely reviewable by courts
• digital contractors (Uber, Amazon, Etsy, Shopify, DoorDash) can be garnished under RTP rules

These rulings create a high bar for taxpayers and make professional representation essential.

Why CRA Garnishes Wages

CRA uses wage garnishments when it determines that voluntary payment is unlikely. Common triggers include:
• ignored CRA letters or calls
• missed payment arrangements
• unfiled returns
• unpaid GST/QST trust amounts
• repeated late filings
• unreported income
• unpaid payroll remittances
• estimated assessments not disputed
• self-employed income with inconsistent reporting
• real estate gains not reported

Quebec files, especially those involving GST/QST, are garnished much more quickly because CRA and Revenu Québec coordinate enforcement.

How Wage Garnishment Works

When CRA issues a Requirement to Pay to an employer or payer:
• the employer must withhold a percentage of wages
• the amount is sent directly to CRA
• the taxpayer receives the reduced pay
• the garnishment applies every pay cycle
• CRA may increase the percentage at any time
• CRA may garnish overtime, bonuses, commissions, and vacation pay
• CRA can garnish multiple employers simultaneously

For self-employed individuals, CRA can instruct clients to redirect payments until the debt is fully paid.

CRA Garnishment Targets (Deep Expansion)

CRA can garnish income from:
• salaried employment
• hourly wages
• self-employed contractor payments
• Uber, Lyft, DoorDash, SkipTheDishes platforms
• Shopify, Etsy, Amazon seller payouts
• payments from landlords to property managers
• tenant rent payments in real estate portfolios
• Stripe, PayPal, and Square deposits
• commissions for realtors, brokers, agents
• professional income (consulting, IT, design, legal, accounting)

In Quebec, Revenu Québec may issue simultaneous garnishments for provincial debts.

Immediate Financial Risks

A wage garnishment can create severe financial instability, including:
• inability to pay rent or mortgage
• credit card defaults
• loss of vehicle financing
• bank account overdrafts
• loss of child support or spousal support capacity
• business cash flow collapse for self-employed individuals
• supplier holds
• credit score damage
• CRA escalating to bank freezes or liens

Most taxpayers cannot sustain a garnishment for more than a few months without intervention.

Mackisen Strategy

Mackisen CPA uses a high-level enforcement defence model to reduce or eliminate garnishments quickly. Our strategy is precise, structured, and based on decades of CRA collections experience.

Step 1 — Immediate CRA Contact

We contact the assigned CRA collections officer the same day to request:
• a temporary halt on garnishment
• confirmation of the amount owed
• identification of missing returns
• clarification of CRA risk classification

This prevents escalation.

Step 2 — Legal Shield and Objection Strategy

We analyze:
• whether objections should be filed
• whether CRA assumptions are incorrect
• whether the debt should be reduced
• whether penalties can be waived
• whether taxpayer relief applies
• whether a financial hardship defence is appropriate

This creates legal grounds for halting garnishment.

Step 3 — Urgent Filing Compliance

CRA does not negotiate long-term until all returns are filed.
We immediately file:
• GST/QST returns
• payroll returns
• T1 and T2 returns
• corrected adjustments
• missing year-ends
• ITC recalculations
• financial statements

Full compliance strengthens negotiation power.

Step 4 — Financial Capacity Modelling

CRA requires evidence to reduce or stop garnishments.
We prepare:
• cash flow projections
• income and expense analysis
• debt servicing requirements
• essential living expenses
• business operating costs
• payroll schedules

This allows us to negotiate realistic payment terms.

Step 5 — Negotiation and Garnishment Removal

We negotiate with CRA for:
• full removal of the garnishment
• reduced percentage
• temporary suspension
• repayment plans based on affordability
• hold on further enforcement
• time to refinance or reorganize debt

CRA is more flexible when detailed documentation is provided.

Step 6 — Long-Term Protection

We manage ongoing compliance to prevent re-garnishment:
• monthly remittances
• quarterly GST/QST reviews
• year-end planning
• tax optimization
• CRA communication management

Our goal is long-term stability, not a temporary fix.

Real Client Experience

A Montreal financial advisor had 40 percent of his income garnished due to unfiled returns and unpaid GST/QST. Within 72 hours, Mackisen filed missing returns, recalculated the actual debt, corrected ITCs, and negotiated a full temporary suspension of the garnishment. A structured payment plan was implemented, and the client avoided bankruptcy.

Another client, a self-employed IT consultant, had all client payments garnished at 100 percent. We intervened, filed objections, provided cash flow evidence, and secured a reduced garnishment of 10 percent, later removed entirely.

Common Questions

• How much can CRA garnish? Up to 50 percent of wages, and up to 100 percent for contractors.
• Can CRA garnish multiple jobs at once? Yes.
• Will my employer know? Yes; they receive the legal notice.
• Can CRA garnish tips or commissions? Yes.
• Does an objection stop garnishment? Only for income tax, never for GST/QST or payroll.
• Can CRA garnish disability or pension? Yes, with some restrictions.
• Can CRA garnish rental income? Yes, through RTPs issued to tenants.
• Can CRA garnish business clients? Yes, through accounts receivable seizures.

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.