Moore
May 2024 Newsletter

What happens if you have an old debt owing to the CRA? Is there a deadline after which the CRA can no longer collect it from you?

The answer is yes — but the rule in question is very restrictive.

Under section 222 of the Income Tax Act, the CRA has 10 years to take collection action of any kind. Any legal collection steps, including if the taxpayer acknowledges the tax debt or makes any payment, restarts the 10-year period. Collection from another party for the taxpayer’s debt (e.g. where the taxpayer has transferred property or money to a family member) also restarts the period. Furthermore, the period is extended if the taxpayer becomes non-resident, or if collection action is restricted for any reason (such as an objection being filed or because of a proposal filed under the Bankruptcy and Insolvency Act).

So if you have an old debt that the CRA seems to have forgotten about, and the CRA has not taken any legal steps to assess you or someone else to try to collect the debts, the debt has likely expired after 10 years of such inaction, and the CRA may be prohibited from collecting it from you.

The same rules also apply for tax debts of other kinds, such as for GST/HST, excise duties and excise taxes.

Last modified on May 8, 2024 12:00 am
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