Payment Plans in Canada
Reviewed by the Commoner Law Editorial Team. Sourced from Canadian federal statutes and official sources. Provincial information reflects each province's own legislation and court rulings. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
If you owe and you can't pay in full, the CRA will almost always work with you on a payment arrangement — discretionary authority that runs through section 220(3.1). The agency would rather collect over time than not at all.
An arrangement spreads the debt over instalments, but interest keeps accruing. The CRA's prescribed interest rate updates quarterly and compounds daily — which is why even small balances grow noticeably if you stretch the timeline.
You can set one up online through My Account or by calling the TeleArrangement line at 1-866-256-1147. Many plans get rubber-stamped automatically if they fit CRA guidelines.
The condition that trips most people: you must keep filing future returns on time while you're on the plan. Miss a filing deadline and CRA may cancel the arrangement and revert to collection.
When does it apply?
Applies to any individual or business with a CRA balance owing.
- Covers income tax, GST/HST, payroll deductions, and benefit overpayments.
- You can request a plan whether you owe a few hundred dollars or tens of thousands.
What to Do If You Owe Taxes to the CRA and Can't Pay in Full
The first rule of tax debt: file on time even when you can't pay. Filing late adds penalties on top of interest.
- File on time, even with nothing attached. Penalty avoidance is free.
- Pay as much as you can up front — daily-compounded interest makes the difference larger than it looks.
- Set a realistic monthly amount based on actual income and expenses, not aspiration.
- Use pre-authorised debit (PAD) through My Account to automate it.
- Make the first payment on schedule. Missing it tends to nuke the whole arrangement.
What should you NOT do?
- Don't ignore collection letters. CRA can garnish wages, freeze bank accounts, and seize assets without going to court.
- Don't miss a payment in silence. Call before the due date to renegotiate — the agency will, the system won't.
- Don't assume a payment plan freezes interest. It doesn't — the prescribed rate keeps compounding daily.
- Don't forget that CRA can offset benefits. Your GST/HST credit or CCB can be redirected against the balance owing.
Use the jurisdiction bar at the top of the page to pick your province — you'll see how provincial law differs from Canadian federal law.
6 provinces available
Common Questions
When does payment plans apply?
Applies to any individual or business with a CRA balance owing.Covers income tax, GST/HST, payroll deductions, and benefit overpayments.You can request a plan whether you owe a few hundred dollars or tens of thousands.
What should I do if I owe money to the CRA in Canada but can't afford to pay it all at once?
The first rule of tax debt: file on time even when you can't pay. Filing late adds penalties on top of interest.File on time, even with nothing attached. Penalty avoidance is free.Pay as much as you can up front — daily-compounded interest makes the difference larger than it looks.Set a realistic monthly amount based on actual income and expenses, not aspiration.Use pre-authorised debit (PAD) through My Account to automate it.Make the first payment on schedule. Missing it tends to nuke the whole arrangement.
What mistakes should I avoid with payment plans?
Don't ignore collection letters. CRA can garnish wages, freeze bank accounts, and seize assets without going to court.Don't miss a payment in silence. Call before the due date to renegotiate — the agency will, the system won't.Don't assume a payment plan freezes interest. It doesn't — the prescribed rate keeps compounding daily.Don't forget that CRA can offset benefits. Your GST/HST credit or CCB can be redirected against the balance owing.
Payment Plans in other states
Same topic, different jurisdiction. Pick the one that applies to you.