Actions That The Canada Revenue Agency Can Take
CRA garnishes your income or puts a lien on your property only as a last resort.
Generally, these measures are applied if you have not filed tax returns for a number of years and have ignored the many letters and phone calls that CRA has initiated. In some cases, CRA will take information from the past and do an arbitrary assessment based on what they feel the taxes should be. Their estimated numbers will not be in the taxpayer’s favour. They will then put a lien on your house, freeze your bank account and garnishee your wages in order to collect the amount they have determined that you owe. Once your bank account is frozen, the CRA can take the money and apply it to the taxes and penalties that are owing. CRA can also criminally charge an individual for not filing their taxes. This is very serious and the situation can be resolved if CRA is communicated with.
If you operate a business, the CRA can garnishee your receivables. After they have completed an audit, they will know who your clients are. They can send a letter of garnishment to your clients, and instead of paying the money they owe to you, your clients pay the money to CRA. This is very embarrassing for a business owner because their customers will know that they are having financial troubles.
If you receive any notice from the CRA, your best option is to get in touch with a collections officer. They will look at the information you bring, showing your assets, liabilities, equity, net worth, and living expenses. Once you have provided them with the details they need, they will work with you on a fair basis of paying your debt. The only time I have ever seen Canada Revenue resort to garnishment is when they are ignored.
If you are receiving notices from CRA or if you discover that they have put a lien on your house or frozen your bank account, you should consult a qualified tax accountant. A tax accountant knows the level of details that the CRA needs to satisfy their requirements. A tax accountant can also help you put together the years of uncompleted tax returns to make sure that you are applying the appropriate deductions and paying only what you need to pay.
