Respond to CRA Collections Immediately

CRA collections officers escalate enforcement quickly — from requirement to pay letters to bank account freezes and wage garnishments. The moment you receive a CRA collections notice, contact them or have your CPA respond on your behalf. Delaying even two weeks gives CRA legal authority to freeze your accounts and seize funds without further warning on your tax debt.

Negotiate a Payment Arrangement

CRA collections will accept structured payment arrangements on outstanding tax debt when you demonstrate inability to pay in full. Your CPA prepares a financial disclosure showing income, expenses, and assets so the CRA collections officer approves a monthly payment plan that fits your cash flow — stopping garnishments and bank freezes while you pay down the tax debt over time.

File All Outstanding Returns First

CRA collections officers will not negotiate a payment arrangement on your tax debt until every unfiled T1, T2, and GST/HST return is submitted. Filing outstanding returns also recalculates your actual balance owing — in many cases, claimed deductions and credits reduce the CRA collections balance significantly, lowering the tax debt you actually need to repay.

Apply for Taxpayer Relief on Penalties

CRA can cancel or waive penalties and a portion of interest on your tax debt under the Taxpayer Relief provisions using Form RC4288. If your tax debt accumulated due to extraordinary circumstances — illness, natural disaster, or a previous accountant's errors — a properly documented RC4288 submission to CRA collections can eliminate thousands in penalties from your outstanding balance.

Stop Wage Garnishments with Representation

When CRA issues a Requirement to Pay to your employer, up to 50% of your wages can be garnished for tax debt. Your CPA can contact CRA collections directly, propose an alternative payment arrangement, and request the garnishment be reduced or lifted. Acting within days of receiving the garnishment notice on your tax debt is critical to restoring your income.

Lift Bank Account Freezes

CRA collections can freeze your business or personal bank account by issuing a Requirement to Pay to your financial institution — locking all funds for your tax debt. Your CPA negotiates with CRA collections to release the freeze by proposing a payment plan and demonstrating that the frozen funds are needed for payroll, rent, and essential business operations tied to your tax debt resolution.

Request Interest Relief on Old Balances

CRA charges compound daily interest on tax debt from the original due date, and on large balances this interest alone can exceed the original tax owing. Under Taxpayer Relief provisions, CRA collections can cancel up to 10 years of accumulated interest on your tax debt when you demonstrate that circumstances beyond your control prevented timely payment.

Correct Arbitrary Assessments

If you never filed returns and CRA issued arbitrary assessments — estimating your income and creating a tax debt based on those estimates — the assessed amount is almost always inflated. Filing actual returns with proper income and deduction documentation through CRA collections replaces the arbitrary numbers with accurate figures, often reducing the tax debt balance by 30% to 60%.

Prevent Director Liability Exposure

Under ITA section 227.1, directors are personally liable for unremitted payroll and GST/HST trust amounts owed by the corporation. If your corporate tax debt includes source deductions or HST arrears, CRA collections can pursue you personally. Resolving the corporate tax debt and demonstrating a due diligence defence protects directors from personal assessment by CRA collections.

Structure a Lump-Sum Settlement Offer

While CRA does not formally settle tax debt for less than the full amount, CRA collections will sometimes accept a lump-sum payment combined with penalty and interest relief under RC4288 that effectively reduces your total tax debt significantly. Your CPA calculates the optimal offer amount and presents it to CRA collections with full financial disclosure to maximize the relief granted.