What Should You Do If You Can’t Pay Your Tax Debt?
If you cannot pay your taxes due to financial hardship, it is important to contact the Canada Revenue Agency to inquire about taxpayer relief provisions.
They will assess your financial situation to determine if you can pay your debt by either reducing your expenses or taking out a loan. If they determine you can’t pay your taxes, they will set up a monthly payment arrangement that will allow you to pay your taxes over a set period.
CRA Income Tax Payment Arrangement
Once your payment arrangement is set, it is important that you follow the payment schedule and make your payments on time. If you fail to make your payments, you will be subject to penalties and interest charges. The CRA may also take legal action to recover the balance of your debt.
What Happens if You Don’t Contact the Canada Revenue Agency
If you don’t contact the CRA to advise them that you can’t pay your taxes or you miss a payment on your payment arrangement, they may take legal action to recover the debt. They may do this by:
- Garnishing your wages or other income
- Putting a lien on your assets
- Seizing your property