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Mortgage-Matters

CRA debt solutions

The Canada Revenue Agency has far reaching powers when you owe money to them. If you owe them, they will find a way to collect.

  • They charge penalties and interest on your overdue taxes.
  • They can withhold payment of your Child Tax Credit and GST rebate.
  • They can take money from your bank account or garnishee your wages.

When you are self-employed and do not have tax deductions coming off your paycheques and haven’t made other provisions to cover your tax debt at the end of the year, you could have a problem.

Tax debt is serious and should be dealt with immediately.

The CRA will generally not accept any arrangement other than a full payment and this is due and payable at the time of your assessment or reassessment.

They cannot set a precedent that would allow them to accept less from everyone else. They have one of the highest rates of collection activity in Canada as our taxes fund public goods and services.

What do you do if you can’t pay them in full?

Contact them immediately.

You may be to negotiate a payment schedule if you can’t pay the full amount, but they generally will not let it be outstanding for over a few months. Know that they will continue to charge the interest and penalties on the past due amount.

If you own real estate, the CRA can register a lien against your property if what you owe to them has been outstanding for an extended period of time.

This is done to guarantee that you pay your outstanding debt. When a lien is registered against your property it can prohibit you from refinancing or selling your property until the outstanding debt is paid in full.

This is important to note - Filing for bankruptcy, or filing a consumer proposal, does not discharge a lien against your property.

If you go bankrupt on your CRA debt, the lien remains and – even worse – accrues interest over time. Even after your discharge from bankruptcy, the lien remains in force, until you eventually sell your home.

Another point to note — if you are self-employed and your income tax is not current, you will not be able to secure mortgage financing to purchase a home.

Canadian banks will not make unsecured loans for payment of income tax debt and they generally cannot refinance an existing mortgage to cover the debt either. 

If you are a homeowner, having an experienced mortgage broker working for you can save you both time and money when seeking a solution to your CRA problem.

If you simply can’t pay the full amount of your back taxes, consider refinancing your mortgage and using the equity in your home, a consolidation loan is possible which can include tax arrears and other debts.

I have access to lenders that will allow a refinance to pay outstanding CRA debt or second mortgage financing. Please give me a call to discuss at 888-561-2679 or email [email protected].



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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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