Below is a list of some important definitions every taxpayer should know when dealing with the CRA. This list outlines some of the CRA’s basic debt collecting tactics, and some important means of relief from these predicaments. Don’t wait for these actions to be taken against you, trust Best Canadian Tax to serve your best interests—not the CRA’s.

Lien

A lien is a monetary claim on property that is used to secure an outstanding debt. For instance, the CRA can place a lien on a taxpayer’s home or vehicle for the amount owed, which will then be deducted the sale of said property.

Wage Garnishment

Wage Garnishment is an automatic deduction from the taxpayer’s paycheck that is used in order to secure an outstanding debt. This deduction does not take into account the taxpayer’s needs, and can leave them unable to provide basic necessities (rent, food, etc.).

Bank Levy

A bank levy is the seizure of funds from a taxpayer’s bank account in order to secure an outstanding debt. This seizure can be made upon both personal and business accounts, and can ruin a taxpayer’s financial stability and credit rating.

Seizure

This is the harshest tactic the CRA uses to secure a tax debt. They have the power to seize a taxpayer’s home, vehicle, or any other valuable asset in order to obtain payment on an outstanding debt.

Waive (penalties)

The “waiving” of penalties means that the taxpayer will no longer incur any penalties or interest on their tax debt, but the previously assessed penalties and interest remain. This can be accomplished through our Taxpayer Relief Program.

Cancel (penalties)

The “cancelling” of penalties means that the penalties and interest associated with the taxpayer’s debt have been eliminated. This is usually because they fit certain reasonable cause criteria, and can be achieved through our Taxpayer Relief Program.

Reasonable Cause Criteria

Reasonable Cause Criteria refers to certain circumstance that, if met and approved, grant the taxpayer the ability to abate their penalties and/or interest. For more information on what constitutes reasonable cause, look at our Reasonable Cause Criteria Quick Guide.

Payment Plan

This is an agreement between the taxpayer and the CRA to pay off an outstanding debt in monthly payment installments.

Insolvency

This is analogous to a bankruptcy, by which all of the taxpayer’s assets are taken and reallocated to pay their creditors, like the CRA. This can harm the taxpayer’s credit rating and financial standing for many years, and is not to be taken lightly without Expert Advice. Look at our insolvency consulting.