Payment Plans — Ontario
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.
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
What is the payment plans right in Canada?
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 automaticall...
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.