What If I Can't Pay the CRA on Time?

A tax bill you cannot pay is stressful, common, and — handled properly — survivable. The CRA's machinery distinguishes sharply between taxpayers who file, communicate, and arrange, and those who disappear; the first group gets payment arrangements, the second gets collections.

The most expensive mistake is instinctive: not filing because you cannot pay. The late-filing penalty (5% of the balance plus 1% per month, doubled for repeat offenders) punishes silence far more than the debt itself, while interest — compounded daily at the prescribed rate — accrues either way.

The engagement path is well-worn: file every return on time; then contact CRA collections (or arrange through My Account or My Business Account) to propose a payment arrangement — a realistic monthly schedule supported by your financial disclosure. CRA accepts arrangements routinely when the proposal is credible and honoured; interest continues, but enforcement pauses. Where the debt arose from circumstances beyond your control — illness, disaster, CRA delay, severe financial hardship — taxpayer relief provisions allow cancellation of penalties and interest on application (Form RC4288), within a ten-year window.

Know the hierarchy of danger. Trust debts — GST/HST collected and payroll source deductions withheld — are not your money and are treated accordingly: directors can be personally liable for a corporation's unremitted amounts, and collections moves faster. Prioritize remitting trust amounts above almost everything, and never fund operations from them. If arrears are already in enforcement — requirements to pay sent to your bank or customers, liens — engagement remains the answer, now with professional help; and where debts are genuinely beyond any arrangement, a Licensed Insolvency Trustee (the only professionals authorized to administer proposals and bankruptcies) belongs in the conversation. Every path is better entered early.