Owe the CRA but can’t pay in full? Your next steps

Arsen Accounting Services · Sources checked October 27, 2026

If you cannot pay your CRA tax bill in full, file any required return and deal with the balance separately. Confirm what you owe, work out an affordable payment proposal and contact CRA about the available arrangements. Avoiding the notice leaves you with less information and less time to act.

Check the balance before arranging payment

Look at the notice of assessment or reassessment and the account transactions. Identify the tax year, tax assessed, interest, penalties and payments already credited. A notice for personal income tax is different from a GST/HST or corporate tax notice. Keep each account’s records separate.

If a payment appears missing or the underlying return seems wrong, flag that issue promptly. A payment arrangement deals with paying a balance; it does not itself correct a return or replace a formal objection. CRA lists adjustments and objections as separate options. CRA — Who can apply for penalty and interest relief

File even if the money is not available

CRA advises filing on time even when you cannot pay. For a late 2025 personal return with a balance owing, the ordinary late-filing penalty is 5% of that balance plus 1% for each complete month late, up to 12 months. Higher repeat-filing penalties can apply. Interest on an unpaid balance is a separate charge and compounds daily. If the filing deadline has already passed, further delay does not resolve the debt. CRA — Interest and penalties on late personal taxes

Prepare a payment proposal you can maintain

Use a realistic household or business budget. Write down regular income, essential expenses, other debts and an amount you can pay now. CRA provides options to arrange payments over time, online or by phone depending on the debt and circumstances. Eligible personal debts may also be handled through the Manage balance service in My Account. CRA — Arrange to pay your debt over time CRA — Manage balance and payment options

A useful preparation list is:

• Your latest notice and a record of payments already made.
• Monthly income and necessary living or business expenses.
• A proposed payment amount and frequency.
• Upcoming tax obligations that also need funding.
• Any correspondence from a CRA collections officer.

A payment plan is not a waiver of interest. Confirm the terms and how payments will be applied. Continue filing future returns and meeting new obligations. If your situation changes, contact CRA before reducing or missing an agreed payment. CRA can still apply certain refunds or government payments against the debt while an arrangement is in place. CRA — Arrange to pay your debt over time

Consider relief separately when circumstances justify it

CRA may consider cancelling or waiving penalties and interest in qualifying circumstances, including certain serious hardship situations, extraordinary events or CRA delays. Supporting documents matter. This relief is discretionary, subject to time limits and does not cancel the assessed tax itself. Keep evidence of the events and dates relevant to your request. CRA — Who can apply for penalty and interest relief

Common questions

Will a small payment automatically create an agreement?

Do not assume that making a payment establishes terms with CRA. Use the applicable arrangement process and retain the confirmation.

Can an accountant promise that CRA will reduce my debt?

No outcome can be promised. Preparing an accurate return, reviewing an apparent error and requesting discretionary relief are different tasks with different requirements.

Start with the return and the notice

Arsen Accounting can discuss personal tax preparation and whether a return review belongs in your engagement. Mention the tax year, type of notice and response deadline. For several missing years, use our catch-up filing guide.

Discuss your tax preparation