CRA Collections: Garnishments, Set-Offs, and Liens
What the Canada Revenue Agency can do to collect a tax debt without going to court, the 90-day pause after assessment, the ten-year limit, and how to stop enforcement.
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
The Canada Revenue Agency collects tax debts without a court order. After a 90-day pause following an income tax assessment, it can garnish your bank or employer, keep refunds and benefit payments, register a Federal Court certificate that acts as a lien, and seize assets. A payment arrangement or objection stops most actions.
On this page
What can the CRA do, and when?
| Action | How it works |
|---|---|
| 90-day restriction | No legal collection action on income tax for 90 days after the notice of assessment (not for GST/HST, payroll deductions, or half of a large corporation's assessment) |
| Set-off | Refunds, benefit payments, and credits are applied to the debt automatically |
| Requirement to pay | A notice to a bank, employer, or customer directing them to send funds to the CRA; employers remit a portion of wages each pay |
| Federal Court certificate | Registered in the Federal Court without a hearing, usually after a legal warning; enforceable like a judgment and registered against real property as a lien |
| Seizure and sale | Of personal or business assets, after a certificate |
| Director's liability | For a corporation's unremitted source deductions and GST/HST |
| Third-party assessments | Against a spouse or common-law partner, a minor, or another non-arm's-length person who received property from the debtor for less than fair market value |
How long can the CRA collect?
For income tax, ten years from the start of the limitation period, which begins 90 days after the notice of assessment. The period restarts when you acknowledge the debt in writing (a written payment proposal counts), make a payment, or when the CRA takes a collection action such as a garnishment, set-off, or certificate. It is extended for time collection is restricted by an objection or appeal and, for someone resident in Canada when it began, for time spent as a non-resident. Debts already payable on March 4, 2004 had their own transition rules.
How do you stop enforcement?
- Pay or arrange to pay. A payment arrangement based on your ability to pay, supported by a financial disclosure, generally halts legal action if kept.
- File an objection. Collection of disputed income tax is suspended while an objection or Tax Court appeal is open.
- Taxpayer relief. Interest and penalties can be cancelled for financial hardship or CRA delay within ten years; the tax itself cannot.
- Insolvency. A consumer proposal or bankruptcy stays collection and can discharge tax debts, with exceptions.
What if you live in the United States?
The CRA cannot garnish a U.S. employer or bank directly, but under the tax treaty it can ask the IRS to collect a finally determined Canadian debt as if it were U.S. tax, with limits for U.S. citizens. Returning to Canada, Canadian assets, and Canadian-source income remain exposed.
Frequently asked questions
Will the CRA take my house?
Rarely, and only after a certificate and court process. A lien on the title is common; forced sale is a last resort.
Can the CRA garnish my spouse's wages?
Not for your debt, unless a third-party assessment applies because you transferred property to your spouse.
Does the 90-day pause apply to GST/HST?
No. GST/HST and payroll source deductions are collectible immediately, which is why those debts are the most urgent.
Can collections contact me directly?
Yes, usually by letter and phone before legal action. Verify any contact through your CRA account; scams imitate collections.
Official sources
The CRA explains: “If you have a debt and haven't confirmed arrangements to pay it, or if you don't make your scheduled payments on time, we may begin legal actions.” — Canada Revenue Agency, If you don't pay your debt - Debt collection at the CRA, https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/when-you-money-collections-cra/personal-debt/legal-warning.html
The CRA explains: “There are certain types of legal action that we cannot normally start until 90 days after we send a notice of assessment or reassessment.” — Canada Revenue Agency, IC98-1R8 Tax Collections Policies, https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic98-1/tax-collections-policies.html
Next step
Fairlight Accounting handles U.S. domestic, cross-border (U.S.–Canada), and international tax returns, plus bookkeeping, payroll, and CFO advisory. Our Canadian Tax Desk negotiates payment arrangements and files the objections that pause collection. See pricing or book a free fit call.
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