Can't Pay Your CRA Tax Bill? Here's What to Do

Owing the CRA more than you can pay is one of the most stressful situations a Canadian business owner or individual faces. The good news: it's manageable, and ignoring it is the only truly bad option.

First, file on time even if you can't pay. Filing on time avoids the late-filing penalty — a flat 5% plus 1% per month up to 12 months. The interest on unpaid tax is bad enough; adding penalties makes it far worse.

The CRA charges compound daily interest on unpaid balances at the prescribed rate, and that interest is not deductible. It accrues until the balance is paid in full, so the longer it sits, the more expensive it gets. Acting early always costs less.

You can request a payment arrangement with the CRA — a structured plan to pay over time. The CRA generally prefers a paid-in-full arrangement, but will work with taxpayers who communicate proactively and demonstrate a realistic plan. Silence is what triggers collection action.

If the debt relates to unfiled returns, the fix starts with catching up. The CRA can issue arbitrary assessments based on estimated income, which are almost always higher than reality. Filing the actual returns often reduces the assessed debt significantly.

We help clients get current, file accurate returns, and approach the CRA with a realistic plan. If you're facing a tax bill you can't pay, book a free consultation — the sooner you act, the more options you have.