--- title: "CRA Collections: What Happens When You Owe the CRA Money" url: https://www.everstonecpa.com/blog/cra-collections-what-happens-next description: "CRA collections, step by step: what the CRA can do to collect a debt, from liens to garnishment, the order it usually happens in. See how to stop it." type: guide updated: 2026-10-08 summary: "CRA collections generally start with a verbal legal warning and one written warning letter before legal action. From there the CRA can garnish wages or bank accounts, register a lien and seize assets. A payment arrangement or full payment is what stops the escalation." faq_count: 8 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) CRA Collections: What Happens Next and How to Stop It CRA # CRA collections *— what happens next* By EverStone CPA · Updated July 2026 · 8 min read **Quick answer:** CRA collections generally start with a verbal legal warning and one written warning letter before legal action. From there the CRA can garnish wages or bank accounts, register a lien and seize assets. A payment arrangement or full payment is what stops the escalation. **Dealing with CRA collections?** We file what is missing, check the balance is right and set up a payment arrangement you can keep. Catch-up from $2,200 a year of records. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=catch-up#enquiry-form) If you owe Revenue Canada money — the CRA, under its current name — the sequence below is what happens next, and in what order. A kept payment arrangement is what stops the escalation. **Rather have a CPA handle this?** A CPA at EverStone replies with a straight answer and a fixed fee for your situation. [Get My Fixed Quote →](https://www.everstonecpa.com/book-online) ## Key takeaways - Before legal action the CRA generally attempts one verbal warning and sends one written warning letter. - Payroll and GST/HST remittance debts are treated more aggressively than other balances. - A legal warning stays valid for 180 days, and action can start any time within it. - Talking to the CRA and arranging payment is what stops the escalation. Tax debt does not sit still. It moves through a defined sequence, and each step is harder to reverse than the last. Knowing the sequence tells you how much room you have, and where the exits are. The steps below set out that CRA debt collection sequence in order, from interest and warnings through garnishment to liens and seizure. ## Step one: interest, offsets and warnings Interest runs on most unpaid balances, with penalties for late filing or payment. Before anything dramatic, the CRA automatically sets off refunds and credits you would receive, such as a GST/HST credit, against your balance. Canada Revenue Agency collections follow a sequence, and knowing where you are in it is what turns panic into a plan. Before legal action, the CRA generally tries at least one phone warning and sends one written warning letter. A legal warning lasts **180 days**, and action can start any time within it. **Business debts are different.** If a business owes a payroll or GST/HST remittance debt, the CRA may begin legal actions right after you are notified of the debt. For those debts the notice of assessment itself is treated as the written legal warning, and once a verbal warning has been attempted the CRA can proceed. Money withheld from employees or collected from customers is not the business’s money, and it is treated that way. **Owe the CRA and getting letters?** Send us the letter. A CPA reads it and replies by email within one business day with what it means, what to do first and a fixed fee for the next step. See [our CRA support](https://www.everstonecpa.com/cra-review-and-audit-support), or [send us the letter](https://www.everstonecpa.com/book-online). [Get My Fixed Quote](https://www.everstonecpa.com/book-online) ## Step two: garnishment A garnishment, or requirement to pay, lets the CRA take funds a third party owes you, served on your employer, bank or a customer. Unlike most creditors, the CRA needs no court order, and you often first hear of it from that third party. ## Step three: liens and seizure Before a lien or seizure, the CRA must certify the debt through a provincial judgment or a Federal Court certificate. It can then register a lien on your assets and property, so on a sale the debt is paid from the proceeds before you receive anything. The CRA can also make another person liable for your debt in defined cases, and seek a court jeopardy order for immediate action where a debt is at risk. Not sure how this applies to you? Every situation is different. Send an enquiry to a CPA and get a straight answer, plus a fixed quote before any work starts. [Send an Enquiry →](https://www.everstonecpa.com/book-online) [See fixed fees](https://www.everstonecpa.com/pricing) ## How to stop it: CRA payment arrangements - **File everything.** Unfiled returns block most options and keep penalties running. If a year was assessed without you, see [arbitrary assessments](https://www.everstonecpa.com/blog/cra-arbitrary-assessment-notional). - **Call before the warning expires.** Where you cannot pay in full and can explain your financial situation, a collections officer will work with you on a plan based on your ability to pay. - **Set up a payment arrangement.** This is the mechanism that stops escalation. Our guide to [payment arrangements when you cannot pay](https://www.everstonecpa.com/blog/cra-payment-arrangements-cant-pay-tax-canada) covers what the CRA asks for. - **Keep the arrangement.** Missing scheduled payments puts you back at the start of the legal-action path. - **Ask about relief where it applies.** Penalties and interest can be cancelled or waived in defined circumstances, which is a separate request from the debt itself. ## Does an objection stop collections? Partly, and not for everyone. After an objection, the CRA normally postpones collecting the disputed amount until 90 days after its decision, but not for amounts you had to withhold and remit, and it can keep collecting corporate amounts even during an objection or Tax Court appeal. Interest generally keeps running. See [how to file a notice of objection](https://www.everstonecpa.com/blog/cra-notice-of-objection-how-to-file), [what that rate is this quarter](https://www.everstonecpa.com/tax-update/prescribed-interest-rates) for the daily-compounding prescribed rate, and [what each CRA letter means and how long you have to reply](https://www.everstonecpa.com/cra-letters). ## How long a debt can be collected The collections limitation period is **6 or 10 years**: 10 for individual tax, corporate tax and GST/HST remittance debts, 6 for payroll debt. The clock restarts on many events, including a voluntary payment, a written acknowledgment, a payment proposal, an objection or appeal, a garnishment or a refund applied to the balance. Canada Revenue collections on an old balance do not simply lapse while you wait. A CRA debt is stressful as well as financial. If it is affecting your sleep or your family, talking to someone helps: [Westpeak Wellness](https://www.westpeakwellness.com/) offers online counselling across BC, in English, Punjabi or Tagalog. ## The bottom line Collections escalate predictably, and each step is easier to prevent than reverse. What reliably stops them is contact: file outstanding returns, call, and set up an arrangement you can keep. If the business cannot fund its tax bill, that is a planning problem worth fixing with [advisory support](https://www.everstonecpa.com/advisory-services). Sources - [Canada Revenue Agency — If you don’t pay your debt](https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/when-you-money-collections-cra/personal-debt/legal-warning.html) - [Canada Revenue Agency — How long a debt can be collected](https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/when-you-money-collections-cra/collections-limitation-period.html) - [Canada Revenue Agency — Putting a lien on or seizing your assets](https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/when-you-money-collections-cra/personal-debt/legal-warning/putting-lien-on-seizing-your-assets.html) - [Canada Revenue Agency — Payment arrangements](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/payment-arrangements.html) This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique, so please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) ### Keep reading [Payment arrangements when you can’t pay →](https://www.everstonecpa.com/blog/cra-payment-arrangements-cant-pay-tax-canada) [Undoing an arbitrary assessment →](https://www.everstonecpa.com/blog/cra-arbitrary-assessment-notional) [How to file a notice of objection →](https://www.everstonecpa.com/blog/cra-notice-of-objection-how-to-file)[One question, answered by a CPA →](https://www.everstonecpa.com/quick-question) FAQ ## Frequently asked questions **What does the CRA do before taking legal action?** The CRA generally attempts at least one verbal legal warning by phone and sends one written warning before legal action. A warning lasts 180 days, during which action can begin even if the balance changes. **Can the CRA take money from my bank account or wages?** Yes. Through a requirement to pay served on a third party, such as your employer or bank, the CRA can intercept funds owed to you. **Can the CRA put a lien on my house?** The CRA must first certify the debt through a provincial judgment or a Federal Court certificate. It can then register a lien on your assets and property, so the debt is paid from sale proceeds before you receive anything. **Are payroll and GST/HST debts treated differently?** Yes, faster. For payroll or GST/HST remittance debts, the notice of assessment counts as the written legal warning, so legal action can start once the business is notified. **Does filing an objection stop collection action?** Usually, but not always: collection on disputed amounts waits until 90 days after the decision, except amounts you had to withhold and remit, and corporate accounts can still be collected during an objection or appeal. **How long can the CRA collect a tax debt?** 6 or 10 years by debt type: 10 for individual tax, corporate tax and GST/HST remittance debts, 6 for payroll. It restarts on events such as a payment, a written acknowledgment or an objection. **Can directors be personally liable for unpaid GST?** Yes. GST/HST a corporation collected and did not remit can be assessed against its directors personally, subject to a due-diligence defence. It is one reason unpaid GST/HST is collected more firmly than most tax debts. [Ask about your case →](https://www.everstonecpa.com/quick-question) **Can I set up a payment arrangement with the CRA?** Yes. Contacting the CRA first with a realistic payment plan usually holds off further action while you keep to it, though interest keeps running. ## CRA collections on your file? Forward the letter and the balance it states. A CPA replies by email within one business day with the options and a fixed fee to deal with it. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…have been completing my bookkeeping, taxes and financials for the last 2 years and they have been amazing. Thank you!” R. H. · Google review **Run your own numbers with the free calculators:** [check your GST/HST math](https://www.everstonecpa.com/gst-hst-calculator) · [run the incorporate-or-not numbers](https://www.everstonecpa.com/incorporation-calculator) · [Payroll deduction calculator](https://www.everstonecpa.com/payroll-deduction-calculator) [← CRA audit triggers — what gets small businesses flagged](https://www.everstonecpa.com/blog/cra-audit-triggers-small-business) [CRA My Business Account: a setup guide for incorporated owners →](https://www.everstonecpa.com/blog/cra-my-business-account-setup-guide) --- Source: https://www.everstonecpa.com/blog/cra-collections-what-happens-next Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online