If you cannot pay your CRA balance in full, you can request a payment arrangement to spread the amount over time. CRA expects you to pay as much as you can afford, as fast as you can afford, with full payment usually expected within 12 months. The agency reviews your income, expenses, and assets in deciding whether to accept the proposed schedule. Interest continues to accrue at the prescribed rate (9 percent annual on overdue tax in Q2 2026) for the entire arrangement period. CRA expects you to keep all current tax filings up to date during the arrangement.
Two paths to a payment arrangement
| Path | Detail |
|---|---|
| Self-service payment arrangement | Through CRA My Account or by phone for balances generally under $10,000 with payment within 12 months. Approved automatically if criteria are met. |
| Negotiated arrangement with a CRA collections officer | Required for larger balances or longer terms. Officer reviews income/expenses statement and may require asset verification. |
How to request via CRA My Account
- Log into CRA My Account or My Business Account.
- Go to “Manage payment plan” under Accounts and payments.
- Enter the proposed payment amount and frequency (weekly, biweekly, monthly).
- Confirm bank account details for pre-authorized debit.
- Receive automatic approval if your proposal fits CRA’s parameters; otherwise the file is routed to a collections officer.
How to request by phone
Call the CRA debt collection number listed on your notice (or 1-888-863-8657 for individual income tax debt). Have ready:
- Total amount owing.
- Monthly net income.
- Monthly expenses (rent/mortgage, utilities, food, transportation, debt payments).
- Asset values (home equity, vehicles, investments outside RRSP).
- Proposed payment amount and frequency.
The officer will either approve, counter-propose, or request additional information before deciding.
What CRA looks at
| Factor | Effect |
|---|---|
| Income vs expenses | The “monthly disposable” amount sets the upper bound on your proposed payment |
| Assets that could be liquidated | Home equity, non-registered investments, vehicles beyond basic transportation may be expected to fund part of the balance |
| Compliance history | Prior arrangements not honoured reduce flexibility on the new one |
| Tax filings up to date | CRA generally requires all returns filed before approving an arrangement |
| Type of debt | GST/HST and source deductions (held in trust by employers) get less flexibility than personal income tax |
Worked example: $32,000 balance, $4,500 monthly net income
A taxpayer owes $32,000 from a 2023 reassessment. Monthly take-home is $4,500; expenses run $3,400. Available monthly cushion is roughly $1,100.
| Plan | Monthly | Months to clear (excl. interest) | Total interest at 9% annual |
|---|---|---|---|
| $1,100/month | $1,100 | 30 | ~$3,500 |
| $2,000/month (stretches budget; uses overtime) | $2,000 | 16 | ~$2,000 |
| $500/month (CRA likely rejects as too long) | $500 | 64 | ~$8,300 |
The CRA collections officer will likely accept $1,100/month with the documentation provided. If the taxpayer can stretch to $2,000, total interest savings approach $1,500 over the life of the arrangement.
What CRA expects from you during the arrangement
- Make every scheduled payment on time. One missed payment can void the arrangement.
- File all current tax returns on time (T1 by April 30 / June 15, GST/HST per your filing frequency).
- Pay current-year tax in full by the due date. Falling behind on the current year while paying off arrears typically triggers collections action.
- Notify CRA of any change in income that would prevent making the agreed payment, before missing a payment.
If you cannot afford even a payment arrangement
| Option | When it makes sense |
|---|---|
| Taxpayer relief (Form RC4288) | Penalties and interest can be cancelled if extraordinary circumstances or CRA delays apply. Does not cancel the original tax. |
| Voluntary Disclosures Program | If undisclosed income is part of the debt, VDP relief on penalties may reduce the total balance. |
| Consumer proposal | Negotiates a reduced settlement of all unsecured debts including CRA. Filed with a Licensed Insolvency Trustee. CRA generally accepts proposals if alternatives are bankruptcy. |
| Bankruptcy | Discharges most CRA debt. Significant credit impact and long-term consequences. |
What CRA can do if you ignore them
- Issue a Requirement to Pay to your employer (wage garnishment) without going to court.
- Issue a Requirement to Pay to your bank (account freeze and seizure).
- Register a lien on real property.
- Claim refunds and benefits (CCB, GST credit, OAS, Canada Disability Benefit) by offset.
- Pursue spouse for shared-debt situations (less common but possible under section 160 derivative assessments).
Cross-references
- How to Pay CRA: All Methods
- CRA Collections and Garnishment: What Happens If You Don’t Pay
- Late Filing Penalty + Interest
- Taxpayer Relief: Cancelling CRA Penalties and Interest
Frequently asked questions
- How do I set up a payment arrangement with CRA?
- Log into CRA My Account → Accounts and payments → Manage payment plan. Self-service approval is available for balances generally under $10,000 with payment within 12 months. Larger balances require a collections officer review.
- Will CRA accept any monthly amount I propose?
- No. CRA evaluates proposed payments against your income, expenses, and assets. If your proposal would take longer than 12 months, expect a collections officer review and potentially a counter-proposal.
- Does interest stop during a payment arrangement?
- No. Interest continues to accrue at the prescribed rate (9 percent annual on overdue tax in Q2 2026) for the entire arrangement period.
- What happens if I miss a payment under an arrangement?
- One missed payment can void the arrangement. CRA may resume full collections, including wage garnishment or bank account seizure.
- Do I have to file my current taxes during a payment plan?
- Yes. CRA requires all returns filed on time and all current-year tax paid in full while the arrangement is in place. Falling behind on the current year typically triggers collections action.
- Can CRA garnish my wages?
- Yes, by issuing a Requirement to Pay to your employer. CRA does not need a court order. The same instrument can freeze a bank account.
- What if a payment arrangement still is not affordable?
- Consider taxpayer relief (Form RC4288) to cancel penalties and interest, the Voluntary Disclosures Program for undisclosed income, a consumer proposal through a Licensed Insolvency Trustee, or bankruptcy as a last resort.