Quick answer: If you owe the Canada Revenue Agency (CRA) a personal tax debt and cannot pay in full, do not ignore a collection letter. Check the balance and the deadline or request in the notice, then contact the CRA or the collections officer named there. Depending on the debt and stage of collection, the CRA may arrange payments or take legal action, including requiring an employer or financial institution to send money to the CRA. Its personal-debt collection guide explains the options.
What this means: A warning is serious, but it does not mean every person will face the same sequence, deadline or percentage taken from wages. The details of your account and any legal document matter.
What to do next: Verify that the contact really is from the CRA, read the exact document you received, and call the number on it if you need to discuss the balance. If you can pay over time, the CRA payment-arrangement page explains the next step.
First, identify what the CRA sent
A notice of assessment showing a balance, a letter from a collections officer, a legal warning and a garnishment document are not interchangeable. Start with the document’s title, date, account, amount, requested action and contact details. Compare the balance with your CRA online account or call the CRA through an official contact route.
If someone contacts you about a debt you have never seen on a CRA notice, the CRA recommends verifying the caller and checking your balance. Do not send banking or identity information to an unverified caller. If a collections officer has written to you, the CRA says to call that officer as soon as possible.
Keep the notice and a dated record of any calls, payments and documents you send. This is a practical record-keeping step, not a substitute for responding to a legal notice.
What can happen if a personal debt is unpaid?
The CRA charges interest on most unpaid balances and may apply refunds or certain government payments to a balance owing. If a debt remains unpaid and no arrangement is confirmed, or scheduled payments are missed, the CRA may begin legal action.
For personal debt, the CRA says it will generally attempt at least one verbal legal warning and send one written warning before legal action. A legal warning is normally valid for 180 days. The word “generally” matters: the CRA describes exceptions, and some business remittance debts follow different rules. There is no safe universal promise that you will have a set number of weeks after a letter.
The CRA lists possible actions including garnishing money, making another person or entity responsible in specified cases, or placing a lien on or seizing assets. Which action is available depends on the situation. The CRA’s collection page describes these rather than offering a single timetable.
What “garnishment” means here
A garnishment is a direction to someone who owes you money or holds money for you to send that money to the CRA toward your debt. That third party might be an employer, a financial institution or another person or organization. The CRA uses legal instruments including a requirement to pay (RTP), enhanced requirement to pay (ERTP) or demand on a third party (DTP) and says it sends the debtor a copy of the request.
The CRA garnishment explanation does not establish one fixed percentage of wages for all personal-tax cases. If you have an RTP or a notice that funds were redirected, ask the collections officer which document applies and what it requires. Do not rely on a general “30%” or “50%” rule from an article.
Money paid through a garnishment is applied to the debt. But whether an existing RTP is changed or withdrawn after a payment arrangement must be confirmed with the CRA; it is not an automatic outcome to promise.
If you cannot pay everything at once
The CRA allows a series of payments for some debts. You can use eligible online pre-authorized debit options or call to discuss an arrangement. Its payment-arrangement page includes a personal income-and-expense worksheet to help work out what you can pay regularly.
Before you call, gather the notice, account details, your balance, current income and essential expenses. Explain what you can pay now and on a repeat schedule. If the CRA accepts an arrangement, make the first payment and keep up with the agreed dates and future filing obligations.
If you cannot make a scheduled payment, contact the CRA before paying less than agreed and ask to change the arrangement. The CRA warns that it may pursue legal collection if you pay less without modifying it. Even when you are making regular arrangement payments, the CRA may use some benefits, credits or refunds to reduce the debt.
If you think the amount is wrong
A payment problem and a dispute about an assessment are different issues. If your balance reflects an assessment or reassessment you believe is wrong, read the notice and check the formal objection route promptly. Do not assume a phone call or arrangement protects an objection deadline.
For an individual income-tax objection, the deadline is often the later of one year after the tax return filing deadline and 90 days after the date of the notice, but exceptions apply. The CRA objection guide explains the categories and that separate process.
The collection consequences of disputing a debt also depend on the type of debt and stage of the process. Ask the CRA about your own account; do not assume every action stops automatically.
A calm checklist for your next call
- Confirm the notice and caller through an official CRA route.
- Find the account, tax year, amount, notice date and requested response.
- Decide whether your immediate issue is paying an accepted debt, correcting a payment, or disputing an assessment.
- Have a realistic amount and schedule ready if you need an arrangement.
- Ask what collection action, if any, is already in effect and what would change it.
- Note the officer’s name, date, outcome and any follow-up documents.
If the CRA asks for something you do not understand, ask it to identify the relevant notice or document. You do not need to guess what a shorthand term means. If the dispute is complex or a legal action affects your ability to meet basic needs, qualified independent help may be worthwhile.
Frequently asked questions
- Can the CRA garnish my wages or bank account?
- The CRA can use a legal requirement to pay to redirect money held or owed by an employer, financial institution or other third party. The document and circumstances determine what applies.
- Will a payment arrangement automatically stop a garnishment?
- Do not assume so. Ask the CRA specifically about any requirement to pay already issued and obtain confirmation of what changes.
- Does the CRA always take a fixed percentage of wages?
- No universal wage percentage is stated in the CRA guidance used for this article. Read the actual legal notice and speak to the collections officer.
- Can the CRA use my refund while I make arrangement payments?
- Yes, the CRA says it may apply some refunds, credits or benefits toward a debt even when arrangement payments are being made.
Related guides and official help
- Browse Canadian Money Help tax guides — related topics; confirm any amounts or deadlines with their linked official sources.
- CRA payment arrangements — paying an accepted debt over time.
- CRA objection rights — disputing an assessment.
Rules and process basis
This guide concerns CRA collection of personal debts and does not predict the action the CRA will take on a particular account. Business payroll and GST/HST remittance debts can follow different rules. A payment arrangement, an objection and a garnishment are distinct processes.