Payment Plans in Alberta
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 money to the CRA and cannot pay the full amount right away, you can set up a payment arrangement under Section 220(3.1) of the Income Tax Act.
A payment plan lets you pay your tax debt in regular instalments over time. However, interest continues to accumulate on your balance. The CRA charges a prescribed interest rate (updated quarterly) on overdue amounts, compounded daily.
You can set up a payment arrangement online through My Account or by calling the TeleArrangement line at 1-866-256-1147. Many plans can be approved automatically if they meet CRA guidelines.
You must keep filing future tax returns on time, even while you are on a payment plan. Missing a filing deadline can cause the CRA to cancel your arrangement.
When does it apply?
This applies to any individual or business that owes money to the CRA.
- It covers income tax, GST/HST, payroll deductions, and benefit repayments.
- 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
- File your tax return on time, even if you cannot pay — filing late adds extra penalties.
- Pay as much as possible upfront to reduce the interest that builds up.
- Calculate an affordable monthly amount based on your income and expenses.
- Set up pre-authorized debit (PAD) through My Account for automatic payments.
- Make your first payment on schedule — missing the first payment can cancel the arrangement.
What should you NOT do?
- Don't ignore collection letters — the CRA can garnish your wages, freeze your bank accounts, and seize your assets.
- Don't miss a payment without calling CRA first — contact them before the due date to renegotiate.
- Don't assume a payment plan stops interest — interest at the CRA's prescribed rate keeps growing on the unpaid balance every day.
- Don't forget that CRA can offset benefits against your debt — your GST/HST credit or CCB payments may be applied to what you owe.
How Alberta differs from federal law
If you owe tax and cannot pay in full, the CRA can arrange a payment plan for both your federal and Alberta provincial income tax debt, since Alberta personal income tax is administered by the CRA.
- The CRA will consider a payment arrangement if you cannot pay your tax debt in full. You must demonstrate that you are unable to pay and propose a reasonable schedule.
- Interest continues to accrue on unpaid balances during the payment plan at the CRA's prescribed rate (compounded daily). There is no interest-free period for payment arrangements.
- You must keep all future tax returns filed and current while on a payment plan. Missing a filing deadline can result in your arrangement being cancelled.
- If you owe less than $25,000, you may be able to set up a payment arrangement online through CRA My Account or by calling the CRA.
- Alberta's graduated provincial income tax (10%–15%) is collected with your federal tax, so a CRA payment plan covers both federal and provincial amounts owing.
Additional Steps in Alberta
To request a payment plan, call the CRA collections line at 1-888-863-8657 or set up a pre-authorized debit arrangement through CRA My Account at canada.ca/my-cra-account. Have your income, expenses, and assets information ready. If the CRA refuses a reasonable payment plan, contact the Taxpayers' Ombudsperson at 1-866-586-3839.
Relevant Law: Financial Administration Act, RSC 1985, c. F-11, s. 155.1 (Authority for payment arrangements); Income Tax Act, RSC 1985, c. 1 (5th Supp.), s. 161 (Interest); Alberta Personal Income Tax Act, RSA 2000, c. A-30
Common Questions
When does payment plans apply?
This applies to any individual or business that owes money to the CRA.It covers income tax, GST/HST, payroll deductions, and benefit repayments.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?
File your tax return on time, even if you cannot pay — filing late adds extra penalties.Pay as much as possible upfront to reduce the interest that builds up.Calculate an affordable monthly amount based on your income and expenses.Set up pre-authorized debit (PAD) through My Account for automatic payments.Make your first payment on schedule — missing the first payment can cancel the arrangement.
What mistakes should I avoid with payment plans?
Don't ignore collection letters — the CRA can garnish your wages, freeze your bank accounts, and seize your assets.Don't miss a payment without calling CRA first — contact them before the due date to renegotiate.Don't assume a payment plan stops interest — interest at the CRA's prescribed rate keeps growing on the unpaid balance every day.Don't forget that CRA can offset benefits against your debt — your GST/HST credit or CCB payments may be applied to what you owe.
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