Can I set up a payment plan with the CRA?

How a payment arrangement actually works

For most individual and smaller business balances, a payment arrangement can be proposed directly online through My Account or My Business Account, where the CRA's system will often accept a proposed monthly payment amount and schedule automatically, without needing to speak with anyone directly. For larger balances, or where the online tool does not offer suitable terms, the next step is contacting the CRA's collections division directly, where an officer reviews the proposal and can negotiate terms based on the taxpayer's documented ability to pay.

The CRA generally expects a realistic proposal, not the smallest possible payment, and may ask for supporting financial information before agreeing to a longer or lower-payment arrangement, particularly once the balance is significant. The exact process and level of documentation requested can also depend on which office or collections team is handling the file.

It also helps to propose an arrangement before the balance becomes seriously overdue rather than waiting for a collections call. A taxpayer who reaches out first, with a specific proposal already in mind, is generally in a stronger position than one who is contacted about an account already flagged for escalation.

Interest keeps accruing the whole time

A payment arrangement stops collection escalation, but it does not stop interest. The CRA charges interest on overdue amounts at the prescribed rate plus a set surcharge, and that rate is set and adjusted quarterly, so it is worth confirming the current rate directly with the CRA or an advisor rather than relying on a number that may already be out of date by the time this is read, since the rate can move meaningfully within the span of a single calendar year. The practical effect is that the total amount owing keeps growing throughout the arrangement, so paying it down faster, where the cash flow allows, reduces the total interest paid.

Some taxpayers assume a payment arrangement pauses interest the same way a credit card promotional rate might; it does not. Building the ongoing interest into the monthly cash flow plan, rather than being surprised by it later, avoids a second cash crunch on top of the first one that created the balance.

Source deductions and HST are treated more strictly

Personal income tax balances and business tax balances are not treated the same way by the CRA's collections function. Payroll source deductions and GST/HST collected from customers are considered trust funds, money the business held on behalf of the government rather than its own money, and the CRA is generally far less flexible about extending arrangements on these amounts. A director of a corporation can also be held personally liable for unremitted source deductions and HST in certain circumstances, which is a meaningfully higher-stakes situation than an overdue personal income tax balance, and one worth addressing before it grows any larger.

If a payment plan is needed because of a cash crunch, it is worth being upfront with an advisor about whether the balance includes trust fund amounts, since the negotiating room and the risk profile are different.

A business juggling both a personal tax balance and an HST or payroll balance should generally prioritize the trust fund amounts first, given the personal liability exposure attached to them, even if the personal balance happens to be larger.

What the CRA can do if nothing is arranged

Without a payment arrangement in place, the CRA has meaningful collection powers: it can issue a requirement to pay directly to a bank or a customer, garnishing funds before they reach the taxpayer, register a lien against property, or apply future refunds and benefit payments against the balance. These actions are generally not the first step; the CRA typically attempts contact and gives an opportunity to arrange payment before escalating, but a balance left completely unaddressed does eventually attract this kind of action.

A requirement to pay is particularly disruptive because it can arrive without much notice to the taxpayer and can freeze a meaningful portion of incoming funds at once. A business that has a requirement to pay issued against a major customer's payments, for example, can face a sudden cash gap on top of the original tax problem, which is part of why negotiating an arrangement before that point is generally worth the effort.

Documenting your ability to pay

A stronger proposal usually includes a simple picture of income, expenses, and available cash, sometimes formalized through a statement of financial affairs for larger balances. Coming to the conversation with a cash flow forecast already built tends to make the proposal more credible and can support a longer or more manageable arrangement than a vague verbal offer.

The documentation does not need to be elaborate to be effective. A simple summary of monthly income, fixed obligations, and what is genuinely left over for the CRA payment tends to carry more weight than a rounded number offered without any supporting detail behind it.

How we help clients negotiate

Through our CFO advisory services and tax services, we help clients build a realistic proposal, distinguish trust fund amounts from other balances, and, where appropriate, act as the point of contact with the CRA's collections division so the conversation happens with someone who does this regularly. We also check whether a separate taxpayer relief request makes sense alongside the payment arrangement, since the two are not mutually exclusive and can be pursued together.