Can CRA let me pay my taxes in installments?
Yes. CRA will typically agree to a payment arrangement if you cannot pay your full balance immediately. Call CRA at 1-888-863-8657 or set up an arrangement through My Account. You will need to explain why you cannot pay in full and propose a payment schedule. CRA considers your financial situation and generally expects you to pay within 12–24 months. Interest continues to accrue on the unpaid balance during the arrangement. CRA may require direct debit payments.
What happens if I ignore my CRA tax debt?
If you ignore CRA correspondence and do not make payment arrangements, CRA will escalate collection actions: first, a series of letters; then telephone contact; then legal action including: wage garnishment (requiring your employer to withhold a portion of your pay), bank account freezes and seizures (requirement to pay sent to your bank), liens on real property (a charge on your home that prevents sale without paying CRA), and seizure of assets. CRA does not need a court order for most collection actions — the Income Tax Act gives CRA broad powers.
Can I negotiate with CRA to reduce my tax debt?
CRA rarely reduces the principal amount of legitimate tax debts. However, you can apply for taxpayer relief to cancel or waive interest and penalties (but not the underlying tax) if your circumstances were extraordinary (illness, natural disaster, financial hardship). For complex cases — particularly where the tax assessment may be incorrect — a tax lawyer can challenge the assessment through objection and appeal processes. The Voluntary Disclosure Program can eliminate penalties for unreported income if you come forward before CRA investigates.