What Types of Legal Action May Be Taken Against You?
There are several methods that the CRA may use to recover a debt. These include the following:
The CRA can contact your employer and ask for a portion of your wages to be paid directly to them until your debt is fully paid.
If you owe taxes, the CRA may get a “writ” or “memorial” to seize property you own, such as cars, boats, or investment property, and have it sold by a court enforcement officer to cover the debt.
Liens On Property
If you own a residence, the CRA may register a lien on the property, so when you sell your home, the proceeds will be used to pay your outstanding taxes.
How Can You Avoid Legal Action?
Contact the Canada Revenue Payments Department before the filing deadline if you cannot pay your income taxes on time. They will discuss a possible solution to help you repay your debt.
Set Up a Payment Arrangement
A payment arrangement is an agreement with the CRA to pay your back taxes by a specified date. If you can only pay a portion of your debt, the CRA will schedule a series of payments over time, making managing your debt easier. If you are unable to make even a partial payment, the CRA will set up a payment arrangement to pay back the full debt.
In both situations, you must calculate your monthly income and expenses to determine how much you can afford to pay to cover the debt.
How To Make Your Payments
When you are on a CRA payment plan, it is important that you make each payment in full and on time. You can pay your taxes in person or by mail or schedule your payments through your Canadian financial institution or credit union.