Can't Pay Your Taxes? CRA Payment Arrangements and Taxpayer Relief

When you owe the CRA more than you can pay at once, the CRA offers formal payment arrangements, and the Taxpayer Relief provisions can cancel penalties and interest in some circumstances. Interest on unpaid taxes runs at 7% per year as of Q4 2026 (compounding daily), and the rate is set quarterly. This page covers both routes; it is part of the Dealing with the CRA directory.

Filing on time still matters when you can’t pay

Not being able to pay and not filing are treated separately. A return filed on time with a balance owing costs interest only; a late return with a balance owing adds the late-filing penalty on top. How that penalty is calculated, and what else the CRA does when a return is missing, is covered in what happens if you don’t file your taxes.

CRA interest on a balance you can’t pay

Current rate (Q4 2026)

How the CRA sets the rate each quarter, and its history, is on the CRA prescribed interest rate page.

What interest adds while you pay

Compound daily at the 7% rate in effect for Q4 2026; the rate changes quarterly, so treat these as illustrative.

Payment arrangements

A payment arrangement is an agreement with CRA Collections to pay a balance over time. While you keep to it:

• Most active collection action stops: the CRA does not garnish wages or freeze accounts while you are honouring an arrangement
• A Requirement to Pay (RTP) is avoided, so nothing is sent to your employer or bank; what an RTP is, and how to get one lifted, is covered in why the CRA took money from your account
• Your credit score is unaffected: the CRA does not report debts to credit bureaus directly (though property liens may appear)
• You get structured time to pay

Interest continues to accrue, but the arrangement prevents escalation.

How to set one up

The Collections line’s hours, and the CRA’s other numbers, are on the CRA contact information page.

Calling CRA Collections. Before the call it helps to have:

• Your SIN
• Your recent Notice of Assessment showing the amount owing
• Bank statements or a rough idea of your monthly income and essential expenses
• The amount you can realistically pay per month

The collections agent will:

1. Confirm the balance owing (including accrued interest)
2. Ask about your financial situation
3. Propose payment terms
4. Set up a pre-authorized debit agreement if you agree to the terms

Pre-authorized debit through My Account. If your situation is straightforward (you know what you owe and have a regular income), you can set up automatic payments without calling:

1. Log in to CRA My Account
2. Under “Payments to CRA”, select “Pre-authorized debit”
3. Enter your bank account (transit and institution numbers)
4. Set a weekly or monthly payment amount and start date
5. The CRA debits your account automatically on schedule

This avoids hold times. With a very large balance or a complicated situation, an agent on the phone can flag the account and hold off collection action while the arrangement is being set up. The other one-off ways to pay the CRA are covered separately.

What the CRA considers

Typical payment terms

If you propose a longer schedule, the CRA may ask for financial documentation (pay stubs, bank statements) before agreeing, or may not agree at all.

Interest math example: If you owe $10,000 at 7% annual interest (the rate as of Q4 2026) and pay it off in equal monthly payments over 12 months, you will pay roughly $383 in interest, since the balance falls as you pay. Paying it off in 6 months instead would reduce that to roughly $205. (Monthly compounding is used here; CRA compounds daily, which adds slightly more.) The prescribed rate changes quarterly, so the figures move with it.

If you miss a payment

1. The CRA will contact you, usually by letter or phone within a few weeks
2. Your arrangement may be cancelled if you do not respond or catch up
3. Collection action resumes: the CRA can issue an RTP or garnish wages

Calling CRA Collections before a payment is missed gives a chance to adjust the arrangement; agents are generally willing to adjust terms once, especially for a one-time financial hardship.

If the debt goes to collections

Without an arrangement, an unpaid balance moves through notices and calls to a Requirement to Pay on wages or bank accounts, liens on property and, as a last resort, seizure of assets. The order and timing of those steps are covered in what happens if you don’t pay the CRA.

Taxpayer relief: cancelling penalties and interest

If you accrued the debt because of circumstances beyond your control (a serious illness, a natural disaster, or even the CRA’s own processing error), you may qualify to have penalties and/or interest reduced or cancelled under the Taxpayer Relief provisions (Income Tax Act subsection 220(3.1)).

What can be relieved

Qualifying circumstances

How to apply

What to include

Relief is discretionary, with no guarantee. A relief application does not stop interest from accruing or collection action from proceeding, so it runs alongside a payment arrangement rather than replacing one.

Unreported income or unfiled returns

If the debt arose partly from unreported income or unfiled returns, a payment arrangement with Collections is separate from the Voluntary Disclosures Program (VDP), which can reduce penalties and some interest for people who come forward and correct their filings. How the program works is covered in the CRA voluntary disclosure guide.

Bankruptcy and consumer proposals

A consumer proposal or bankruptcy can include CRA tax debt, and the CRA votes as a creditor on a proposal. How the two differ, and what each costs, is covered in bankruptcy vs a consumer proposal.

Getting help

Related CRA guides

• Checking what you owe the CRA: where the balance shows and why it appeared
• Tax instalments: paying through the year so a balance doesn’t build up at filing time
• Disputing a CRA assessment: if you think the balance itself is wrong