What Happens If You Don't Pay the CRA? Interest and Collections

The CRA has some of the broadest collection powers of any creditor in Canada. Unlike a bank or credit card company, it does not need to take you to court before garnishing your wages, seizing your bank account, or placing a lien on your property, and the longer a tax debt goes unaddressed, the further along its collection steps the file moves. This page sets out the timeline, the interest and the tools the CRA can use; it is part of the Dealing with the CRA directory.

The CRA’s legal advantage over other creditors

Private creditors (credit card companies, banks, collection agencies) must sue you in court and obtain a judgment before garnishing wages or seizing property. The CRA does not. Under the Income Tax Act, the CRA can:

• Issue a Requirement to Pay (RTP) directly to your employer or bank, with no court involved
• Register a lien on your property through the Federal Court and the provincial land title registry
• Intercept future government payments (GST credits, CCB, income tax refunds)
• In extreme cases, seize and sell assets

How private creditors collect, and what wage garnishment involves outside tax debt, is covered in the guide to wage garnishment in Canada.

CRA enforcement timeline

Important: These timelines are approximate. CRA may accelerate collection if they believe you are dissipating assets, leaving the country, or deliberately avoiding payment. The timeline starts from the balance shown on your Notice of Assessment.

How the stages play out

Notices and reminders. After a balance appears on your account (usually after April 30 if you owe from your return), the CRA sends a Statement of Account showing the balance owing, followed by reminder letters. Interest is accruing at this stage but no collection action has started. How to check the balance yourself is covered in how to know if you owe the CRA.

Collections contact. A CRA collections officer contacts you by letter or phone to discuss payment. This is the stage at which most files are settled with a payment arrangement.

Requirement to Pay. If there is no response or arrangement, the CRA can send an RTP to your employer, your bank, or anyone who owes you money, and they are legally required to pay the CRA instead of you. What each kind of RTP takes, and how to get one lifted once money has been taken, is covered in why the CRA took money from your account.

Liens. The CRA can register a Certificate of Indebtedness in the Federal Court, which is then registered in the provincial land title system against any real property you own.

Legal action and seizure. For very large debts or when other methods have failed, the CRA can obtain a court judgment, seize and sell personal property (vehicles, investment accounts, business assets) and, in extreme cases, start proceedings to sell real property. In practice it rarely goes this far, since it prefers payment arrangements, but the legal authority exists.

How CRA interest compounds

CRA interest is compounded daily at the prescribed rate (set quarterly; the history is on the CRA prescribed interest rate page). The current rate is 7% (Q4 2026).

Worked example: $15,000 tax debt left unpaid

After 5 years, the original $15,000 debt has grown to $21,285, a 42% increase from interest alone, at the current 7% rate. (Note: the prescribed rate changes quarterly and was as high as 10% in 2024, so a multi-year projection like this is illustrative only: it assumes today’s rate holds, which it will not.)

CRA collection tools

Requirement to Pay and set-off

The Requirement to Pay is the CRA’s most common enforcement tool and needs no court order. Separately, the CRA applies any refund or benefit payment it owes you against the debt, a set-off that happens automatically. Both are explained, payment by payment, on the page about money the CRA has already taken.

Property liens

CRA can register a memorial or certificate against your real property. This:

• Appears on a title search, preventing sale or refinancing without paying the debt
• Remains until the full debt (including interest) is paid
• Takes priority over most other creditors registered after the lien

Passport and travel restrictions

CRA can request that the Passport Office deny or revoke your passport if you owe more than $100,000 and CRA has obtained a jeopardy order. This is rare and reserved for cases where CRA believes you intend to leave Canada to avoid payment.

How long the CRA can collect

The CRA can collect on a tax debt for up to 10 years from the date of the original assessment. However, the clock resets if:

• The CRA contacts you about the debt (in writing or by phone)
• You make a partial payment
• You sign a payment agreement

In practice the 10-year limitation is rarely useful, because the CRA typically pursues debts actively long before that threshold. The CRA’s limitation rules are in the Income Tax Act, section 222.

What stops or slows collections

• A payment arrangement. Interest continues to compound, but an arrangement with CRA Collections holds off garnishment and liens while you pay. How to set one up, what the CRA considers and typical terms are covered in CRA payment arrangements when you can’t pay.
• Taxpayer relief. If penalties and interest built up because of extraordinary circumstances (serious illness, natural disaster, CRA error), Form RC4288 asks the CRA to cancel them; the same guide to payment arrangements and taxpayer relief covers the request. It does not reduce the tax itself.
• An objection. If the debt comes from an assessment or reassessment you think is wrong, a Notice of Objection filed within 90 days holds off collection on the disputed amount while it is reviewed; the steps are in how to dispute a CRA assessment.
• A consumer proposal or bankruptcy. Either one triggers a stay of proceedings that stops CRA collection action. Legitimately assessed taxes, even large amounts from reassessments, can generally be included, though debts arising from fraud or deliberate evasion are not discharged. How the two differ is covered in bankruptcy vs a consumer proposal.
• Filing every return. Unfiled years add late-filing penalties and stand in the way of an arrangement; what those penalties are is covered in what happens if you don’t file your taxes. Debts that come from unreported income or unfiled returns may also qualify for the Voluntary Disclosures Program.

CRA Collections for individual accounts is reached at 1-888-863-8657; the hours and the CRA’s other numbers are on the CRA contact information page.

When professional help comes in

A Licensed Insolvency Trustee (LIT), not a debt consultant, is the only professional authorized to file for bankruptcy or a consumer proposal in Canada.

Related CRA guides

• Ways to pay the CRA: online banking, My Payment and pre-authorized debit
• Tax instalments: paying through the year when no tax is withheld at source