First of all, you should know that if you do not pay your tax debt or pay late, you risk numerous sanctions from the CRA or Revenu Québec. You will first receive a Notice of Assessment. If you do not pay your balance, you will be considered in default. You can be sure that these two government authorities will not stop until you pay them what you owe. They have many very effective tools at their disposal, such as:
Garnishment of wages: this is one of the first actions taken by the CRA to recover tax debt from wage earners. It means that your employer will have to pay the CRA a part of your salary until the entire debt has been repaid. The CRA will determine the amount payable (generally, 30% of your salary). If you are self-employed, you will not receive amounts owed by your clients, since these will be going directly to the tax authorities.
Bank account freeze: you will no longer be able to access the money in your accounts (personal or business). The CRA could seize the funds until you pay your debt or enter into payment arrangements. Obviously, this measure will have an impact on your mortgage and car payments and daily expenses.
Seizure and sale of property or assets: your investments, including your RRSPs and TFSA, your car, computers or any other personal property can be seized without Court approval.
Seizure of your spouse’s salary and accounts: being held jointly and severally liable for your tax debt, your spouse’s salary, property, assets or accounts may be seized like your own.
Registration of a Crown mortgage on your property: in order to protect their claims, the CRA and Revenu Québec can register a Crown mortgage on your property without your consent.
Although rare, some tax offences can lead to jail time. In addition, the longer the delay in paying your debts, the greater the interest and penalties. So, the last thing you want to do is to ignore the problem. If you have tax debt, take action as soon as possible!
