Wage Garnishment by Canada Revenue Agency

We all have bills to pay and obligations to meet. But what happens when you find yourself in a situation where you owe money to the Canada Revenue Agency (CRA)? The consequences can be quite severe, especially if the CRA resorts to wage garnishment. Let’s explore this topic in-depth to understand the process and your rights.

What is Wage Garnishment?

Wage garnishment is a legal procedure where a portion of a person’s earnings is withheld by their employer to pay off a debt. This method is often used when a debtor has been consistently unable to pay off what they owe.

CRA and Wage Garnishment

Unlike other creditors, the CRA doesn’t require a court order to impose a wage garnishment. They can simply issue a “Requirement to Pay” letter to your employer or bank, instructing them to redirect a part of your income or savings to settle your tax liabilities. This makes the CRA a formidable creditor that shouldn’t be underestimated.

How does Wage Garnishment by CRA Work?

When you owe money to the CRA, they can take a number of actions to recover the debt:


Seize or Freeze Your Bank Accounts: The CRA can seize the funds in your bank accounts to cover your tax debt. They can also freeze your accounts, preventing you from accessing your own money.

Garnish Your Wages: The CRA can require your employer to divert a portion of your wages to pay your tax debt.

Garnish Other Income Sources: The CRA can seize other forms of income, such as receivables, to pay off your debt.

Lien Your Property or Force Its Sale: The CRA can place a lien on your property, which could lead to a forced sale if the debt remains unpaid.

Seize or Sell Your Assets: The CRA can seize your assets, such as your car or other valuable possessions, and sell them to cover the debt.


How to Protect Yourself from Wage Garnishment by CRA

If faced with the threat of wage garnishment by the CRA, it’s crucial that you take immediate action. Here are some options you can consider:


Negotiate with the CRA: You can try to negotiate with the CRA to reduce the amount you owe or set up a payment plan. However, this can be tough as CRA collection agents have limited authority to reduce the principal amount.

Consult a Tax Professional: A tax professional can provide valuable advice on how to handle your situation. They can negotiate with the CRA on your behalf and help you come up with a viable payment plan.

File a Consumer Proposal: Filing a consumer proposal can stop the garnishment process. It brings the CRA to the negotiation table and allows you to propose a repayment plan that suits your financial situation.

File for Bankruptcy: Although a last resort, filing for bankruptcy can also stop wage garnishment. However, the consequences of bankruptcy are severe and can have a long-lasting impact on your financial health.


Dealing with the CRA

Dealing with the CRA can be intimidating, but remember, you have rights. If you owe money to the CRA, it’s important that you understand your situation and take the necessary steps to protect your financial wellbeing.

Whether you decide to negotiate with the CRA, consult a tax professional, file a consumer proposal, or even consider bankruptcy, remember that the goal is to find a solution that works for you. Don’t let the fear of wage garnishment by CRA push you into making hasty decisions.

Get Professional Help

If you’re facing wage garnishment by CRA, don’t hesitate to seek professional help. A tax professional or certified accountant can provide expert advice and guide you through the process. They can help you understand your situation, assess your options, and develop a plan that suits your needs.


Wage garnishment by the Canada Revenue Agency is a serious matter that requires immediate attention. If you find yourself in this situation, it’s important to understand your rights and explore all available options. With the right approach and professional help, you can navigate this challenging situation and take steps towards financial stability.

Remember, the key is to act promptly and seek professional advice. The sooner you address the issue, the more options you’ll have at your disposal. So, don’t delay – take action today to protect your financial future.

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