Payment Plans in Ontario
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 Ontario differs from federal law
Tax payment plans for income tax and HST are arranged through the CRA, which collects both federal and Ontario taxes. Ontario does not have a separate payment plan system for income tax.
- If you owe income tax (federal and Ontario combined) and cannot pay in full, you can request a payment arrangement with the CRA. Call the CRA collections line or use the My Account portal to propose monthly installments.
- Interest continues to accrue on unpaid balances during a payment plan. The CRA charges compound daily interest at the prescribed rate (adjusted quarterly). However, no further collection action is taken while you are compliant with the arrangement.
- Ontario residents who owe provincial offence fines (e.g., traffic tickets, bylaw violations) can arrange payment plans through their local municipal court or the POA (Provincial Offences Act) court.
- Ontario property taxes are collected by your municipality. If you fall behind, most Ontario municipalities offer payment plans — contact your municipal tax office. Note: unpaid property taxes can lead to a tax lien and eventually a municipal tax sale.
Additional Steps in Ontario
Call the CRA at 1-888-863-8662 or use My Account (canada.ca/my-cra-account) to request a payment arrangement. The sooner you contact the CRA, the better — they are generally more flexible before collection actions start. For property tax arrears, contact your municipal tax department directly. Free tax clinics can help you understand your options.
Relevant Law: Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 220(3.1) (Discretionary Powers); Financial Administration Act, R.S.C. 1985, c. F-11 (prescribed interest rates)
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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