What should you do if you receive a debt notice from the CRA?

Receiving a debt notice from the Canada Revenue Agency (CRA) is a very serious situation that requires immediate and thoughtful action. The main rule: do not ignore this correspondence. The CRA has much broader powers than banks or private lenders — the agency can garnish wages, freeze bank accounts, and seize property even without a court order.

Quick, organized action gives you a chance to avoid the most painful consequences — frozen accounts, seizures, and pressure. Below is a step-by-step guide with real tools available in Calgary.

Understanding the types of notices from the CRA

Notice of Assessment (NOA):

  • Standard notice after filing a return.
  • Contains the result of processing: payable, refundable, or “0.”
  • Does not mean a problem with debt (it is a “receipt” for the receipt of the return).

Notice of Collection:

  • Sent only to debtors who have ignored previous reminders.
  • Gives the CRA grounds for enforcement measures.
  • Requires your immediate action!

Typical timeline:

  • Day 0: received NOA
  • Days 1-90: “protected” period — CRA has no right to enforce collection
  • Day 91+: collection actions up to seizure are possible (exception — you filed a Notice of Objection)

First steps after receiving the notice

  1. Contact the CRA immediately
  • Personal taxes: 1-800-959-8281
  • Business taxes: 1-800-959-5525
  • If the letter contains the contact details of a specific officer, call them directly
  • Office hours: Mon–Fri 8:00 a.m.–8:00 p.m., Sat 9:00 a.m.–5:00 p.m.

Before calling, have the following information ready:

  • Your SIN or Business Number
  • Full name, date of birth, address
  • Notice of Assessment (paper or electronic My Account)
  • Have your financial information handy
  1. Assess your financial situation
  • Make a detailed list of your income/expenses (template: “Monthly Net Income and Expense Worksheet” from CRA)
  • Calculate how much you can actually pay each month
  1. Cut back on expenses
  • Temporarily cancel unnecessary subscriptions
  • Review your entertainment and dining out expenses
  • Consider whether it makes sense to use some of your savings (CRA interest rates may be higher than TFSA returns, etc.)

Options for resolving your debt

A. Payment Arrangements:

  • This is an informal agreement with the CRA for a clear schedule of partial payments.
  • How to arrange:
  • Through My Account/MBA — select the “Pay by pre-authorized debit” section
  • By phone: TeleArrangement Service (1-866-256-1147) or Debt Management Call Center (1-888-863-8657)
  • The CRA expects payment within 12–18 months, but sometimes agrees to slightly longer terms
  • You will often be asked to provide financial information and bank statements

Tips:

  • Do not offer unrealistic payment amounts!
  • All returns must be filed — even if they are late
  • Always record (in brief) all agreements in writing/email

B. Taxpayer Relief Application (form RC4288):

  • Can be submitted to cancel penalties/interest if the debt arose due to:
  • Serious illness in the family, accident, death
  • Natural disaster
  • Significant financial hardship
  • Error or delay on the part of the CRA
  • Required:
  • Complete and submit RC4288
  • Include medical certificates, financial statements, letters from the CRA
  • All of this must be submitted no later than 10 years from the year the debt arose

C. Notice of Objection (appeal of the amount of debt):

  • File an appeal if the CRA has calculated incorrectly, failed to take expenses into account, or you disagree with the penalties
  • 90 days from the date of the NOA — strict deadline!
  • Submit via My Account/MBA or on paper (form T400A)
  • Include the following with your letter of evidence:
  • Arguments and facts
  • All supporting documents
  • References to laws/regulations (optional)

What the CRA can do if you don't pay

  • Wage garnishment (seizure of wages):

  • Up to 50% of net wages (employee)

  • Up to 100% of income (self-employed/contractor)

  • Protection applies in Alberta: the first $800/month is not taken, and protection increases for dependents

  • Bank account freeze:

  • CRA sends a “Requirement to Pay” to the bank — the account is frozen without warning

  • All funds may be used to repay the debt

  • Seizure of property, accounts receivable:

  • Customers are required to pay CRA, not you

  • CRA may file a claim for seizure and sale of property

How to urgently protect yourself from collection

  • Notice of Intention (NOI) to Make a Proposal:

  • For serious financial difficulties — contact a Licensed Insolvency Trustee (LIT)

  • All CRA enforcement actions are frozen (legal stay of proceedings)

  • Time for restructuring

  • Not bankruptcy, but a responsible step!

  • Orderly Payment of Debts (OPD) — only in Alberta:

  • Consolidation of all debts, including taxes

  • Stop interest/collection, repayment plan up to 5 years

  • Available through Money Mentors, other agencies

Practical organization and local resources

  • Keep all records: copies of letters, payment receipt numbers, names of agents, dates of conversations
  • Local assistance:
  • Calgary Legal Guidance
  • Volunteer tax clinics (SAITSA, UCalgary students, Carya Calgary)
  • Licensed Insolvency Trustees — in cases where the situation is very complex

Mistakes to avoid

  • Do not react (“ostrich policy”)
  • Do not wait until the last day (or later) to appeal
  • Do not promise more than you can actually pay
  • Do not confirm your words with documents
  • Do not ignore phone calls and letters from the CRA

Conclusions and practical recommendations

  • Act immediately — even if the amount of debt is shocking.
  • Arrange payments — either through My Account or by phone/letter.
  • Use mitigation and appeal mechanisms — it is likely that some of the debt can be cancelled.
  • Keep records of everything — bureaucracy often works in favor of organized payers.
  • Don't be afraid to seek help — tax advisors, LIT, and free clinics in Calgary are always available to help you sort things out.

Receiving a debt notice is not the end of your financial story, but a chance to resolve everything quickly and without loss!