Receiving a tax bill you can't pay is stressful — but ignoring it is always the worst option. Here are your legitimate choices.
Rule #1: Always File on Time
The late-filing penalty is 5% of the balance owing plus 1%/month for up to 12 months. Filing on time and not paying is far less costly than not filing at all.
Option 1: CRA Payment Arrangement
CRA sets up payment plans for those genuinely unable to pay the full balance. Call 1-888-863-8657 or use My Account. Interest (~9% annually) continues to accrue but penalties are avoided while on a plan.
Option 2: Taxpayer Relief Application
CRA can cancel or waive interest and penalties for circumstances beyond your control: serious illness, natural disaster, financial hardship, or CRA error. File Form RC4288. Process takes 6–12 months but can eliminate thousands in charges.
Option 3: Revenu Québec Arrangement
Revenu Québec has a separate payment arrangement process — contact them independently from CRA.
Option 4: Consumer Proposal or Bankruptcy
Tax debt can be included in a consumer proposal or bankruptcy as a last resort — though with significant credit implications.
What NOT to Do
- Don't ignore CRA correspondence — escalates to collections, liens, wage garnishment
- Don't use HST/payroll trust funds you've collected — this is a criminal offense