Are you worried about the CRA garnishing your wages? It’s a common fear among Canadians, but it’s important to know that the Canada Revenue Agency (CRA) has the power to garnish your wages in certain circumstances. In this article, we’ll go over everything you need to know about wage garnishment by the CRA.
What is wage garnishment?
Wage garnishment is a legal process where a creditor can collect money directly from your wages or salary. In the case of the CRA, it means that they can take a portion of your paycheque to satisfy outstanding tax debts.
When can the CRA garnish your wages?
The CRA can garnish your wages if you have an outstanding tax debt that you have not paid or made arrangements to pay. Before taking this step, the CRA will first send you a notice of assessment or reassessment and a demand to pay. If you do not respond to these notices or make arrangements to pay your debt, the CRA may then issue a requirement to pay (RTP) to your employer. This RTP will require your employer to deduct a portion of your wages and send it directly to the CRA to satisfy your tax debt.
How much of your wages can be garnished?
The CRA can garnish up to 50% of your wages, depending on the amount of your tax debt and the province you live in. The exact amount that can be garnished varies by province and is subject to change based on inflation. The CRA will inform your employer of the percentage of your wages that should be deducted and sent to the CRA.
What can you do if the CRA is garnishing your wages?
If the CRA is garnishing your wages, there are a few things you can do to try and resolve the situation. First, you should contact the CRA to try and make arrangements to pay your tax debt. The CRA may be willing to work out a payment plan with you that allows you to pay off your debt over time. If you are unable to make arrangements with the CRA or if the garnishment is causing financial hardship, you may be able to apply for a release of the garnishment. This will require you to provide the CRA with detailed financial information to show that the garnishment is causing you undue hardship.
In some cases, it may be advisable to seek the help of a tax professional or debt counsellor. These professionals can provide you with advice on how to deal with the CRA and can help you explore your options for resolving your tax debt.
Conclusion
In conclusion, the CRA does have the power to garnish your wages if you have an outstanding tax debt. However, they will typically only take this step after sending you several notices and giving you an opportunity to make arrangements to pay your debt. If the CRA is garnishing your wages, it’s important to take action and try to resolve the situation as soon as possible. By contacting the CRA, seeking professional advice, or applying for a release of the garnishment, you may be able to find a solution that works for you.