CRA Collections

The powers given to CRA’s Tax Collections Officers often take Canadian taxpayers by surprise because Canada’s Income Tax Act gives the CRA’s Tax Collections Officers extensive powers to collect income taxes owing. CRA’s Tax Collections Officers often start their initial collection activity in a similar manner as that of private collections agencies by making phone calls to the taxpayer. Sometimes the CRA’s Tax Collections Officers also make in person visit to the taxpayer’s home or registered offices in case of a corporation. This strategy is mainly intended to intimidate the taxpayer and remind them once again of their outstanding tax debts. At this point every taxpayer should remember that they have the right to be represented by a person of their choice as per the CRA’s documented Taxpayer Bill of Rights which is binding on the CRA. Rather than speak to a tax collection officer on your own, contact one of our Canadian income tax lawyers to speak to the CRA on your behalf.

Get expert Canadian income tax lawyer analysis on CRA’s Tax Collections Powers

If the above mentioned strategy does not get any result then CRA’s Collections Officers have the power to garnishee amounts owing to a taxpayer who has an outstanding balance on their tax account, including salary payments. In order to determine the existence of any outstanding accounts receivable the CRA’s Collections Officers can obtain internal documents of a business. Our top Toronto income tax lawyers should be contacted immediately to avoid damage to ongoing business and cash flow. Other collection methods include RRSP seizures or bank account seizures. When these steps do not settle a taxpayer’s debt with the CRA, the CRA’s Tax Collections Officers, without giving a notice to the taxpayer, can go to the Federal Court of Canada and register a certificate against the taxpayer for the cra balance owing including penalties and interest. This certificate allows the CRA’s Tax Collections Officers to take further legal action.

CRA’S COLLECTIONS: GREATER CRA ENFORCEMENT METHODS

The CRA’s Collections Officers, in order to enforce payment, can proceed with greater enforcement methods like putting up any personal property of a taxpayer on auction or by placing liens on the taxpayer’s property until the balance is paid in full. A taxpayer is usually given a period of 90 days to make good on any debt stemming from a tax assessment before giving the file to a CRA Collections Officer. CRA’s internal policies also place other restrictions on its collection powers to avoid escalation of legal action when a taxpayer has negotiated a mutually accepted payment arrangement. The exception to these restrictions on CRA collection powers is that if the CRA feels that its ability to collect the amounts owing will be placed in jeopardy due to the 90 day restriction period the CRA Collections Officers can take legal action to secure the debt as per the jeopardy collections provisions of the Tax Act.  Our expert Canadian income tax lawyers will solve your collection issues with the CRA and will give you advice on your rights in any collections dispute to ensure that your rights are protected. Contact our expert Canadian income tax lawyers to get the tax representation you need before the CRA Collections Officers come calling.

FAQ’s

What assets can CRA seize?

When you don’t pay your debt in full and on time and you refuse to corporate, the CRA has several options to recover the money owed. These options include seizing your assets and property. For an individual this could include your personal residence ,car, boat, cottage etcetera while for a business this could include your business assets and property.

What happens when CRA takes legal action?

CRA can take legal action against a taxpayer. The Canada’s Income Tax Actbgives the CRA’s Collections Officers the power to garnish income amounts owing to a taxpayer who has an outstanding balance on their tax account. They get a court order to freeze your bank account and once they get your money it’s impossible to get it back. They can audit your bank and assume every cash deposit is income and it will your burden to prove otherwise.

Can the CRA take money from your bank account?

Bank accounts can be seized and money taken without a court order before the taxpayer has time to react.The CRA audits your bank and assumes that every cash deposit is in fact income. The bank has no choice but to forward the money in your account to the CRA until it fulfills the amount on the Requirement to pay letter or you come up with the CRA and have the requirement withdrawn.

What is a CRA notice of collection?

The CRA notice of collection is a legal warning, that it may start legal action against you without further notice if you do not pay your tax debt or call the CRA to make a payment arrangement. The CRA may garnish your income, garnish your bank account, seize and sell your assets, or use any other means under the laws that apply to collect the amount you owe. Before starting legal action, the CRA must make 1 attempt to give verbal legal warning by phone and send 1 written legal warning letter.

How long do I have to pay the CRA?

Each tax debt has a 6- or 10-year collections limitation period. The limitation period can be restarted or extended when certain events occur. When these events occur, the total amount of time that the CRA has to collect the debt will be longer than 6 or 10 years. Even after the collections limitation period ends, you can still have a tax debt. Interest will continue to accrue until the tax debt is paid in full.

How far back will the CRA pay refunds?

The CRA audit time limit states that the agency has four years from the date on your Notice of Assessment to go back and conduct an audit. This means if you file your 2017 tax return in April 2018 and receive your assessment in June 2018, the CRA can audit this return until June 2022.

“This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.”