How the CRA collects a tax debt, explained

Our own explainer on how the IRS collects a tax debt covers the U.S., where a lien attaches by statute the moment a bill goes unpaid and a levy can follow with only a 30-day notice. The Canada Revenue Agency runs a structurally different toolkit built around the same basic idea: a private creditor has to sue you and win before it can touch your wages or bank account, and the CRA generally doesn't.

A tax debt becomes a court judgment without a lawsuit

Under section 223 of the Income Tax Act, the Minister can certify the amount of a tax debt and register that certificate with the Federal Court. Once registered, the certificate has the same effect as a judgment of that Court for the certified amount, plus interest — without the CRA ever filing a civil suit, and without a trial. Registering the certificate itself isn't where you get to contest whether you actually owe the money; that happens earlier, through the Income Tax Act's own objection and appeal process (a formal objection to the Minister, and, if that fails, an appeal to the Tax Court of Canada). Once the certificate is registered, the CRA can use it the same way any other judgment creditor would use a court judgment — including registering a lien or charge against real property you own, under whichever province's own land-title or land-registry system applies, without a separate court proceeding to obtain that lien.

The Requirement to Pay: already covered on our other Canadian pages

The CRA's best-known collection tool doesn't need the certificate process at all. Under section 224 of the Income Tax Act, the CRA can send a "Requirement to Pay" directly to an employer, a bank, or anyone else who owes the tax debtor money, compelling that third party to redirect the funds to the CRA instead — legally binding, with no court order and no judgment required first. We cover this tool's mechanics, and how it overrides the ordinary provincial wage-garnishment formulas, in full on our Canadian wage garnishment and CPP/OAS/EI garnishment explainers — this page focuses on the rest of the CRA's toolkit around it.

A ten-year clock — that specific CRA actions can restart

Subsection 222(3) of the Income Tax Act sets a real outer limit: generally, the CRA cannot start or continue a legal action to collect a tax debt more than ten years after that debt became collectible. That sounds like a hard stop, but subsection 222(5) lets specific events reset the clock back to zero — generally, the taxpayer acknowledging the debt in writing (including a written promise to pay or, per CRA's own guidance, certain part payments), or the CRA itself taking a defined collection action against the debt, such as registering a certificate under section 223 or commencing a legal proceeding. In practice, this means an old CRA debt can remain fully collectible far longer than ten years after the original assessment if the CRA has kept taking qualifying collection steps along the way — a materially different result from the fixed provincial limitation periods our own Canadian debt-lawsuit limitation-periods explainer describes for an ordinary private creditor, most of which run once and expire for good absent a fresh acknowledgment or payment.

The exact list of actions that restart the ten-year clock, and how CRA's own collections officers apply it in practice, is genuinely technical. If you're trying to determine whether a specific old CRA debt is still within its collection window, that's a question for a tax lawyer or licensed insolvency trustee reviewing your actual account history, not something to assume from the general rule alone.

What a bankruptcy or consumer proposal actually clears

Our own Canadian bankruptcy and consumer proposal explainer covers the general process; CRA debt interacts with it in a few specific ways worth knowing on their own. Filing either one generally triggers an automatic stay that stops the CRA's own collection actions the same as any other creditor's, and ordinary personal income tax debt is typically treated as an unsecured claim, provable and dischargeable like any other. Two exceptions apply more narrowly: unremitted employee source deductions that an unincorporated proprietor or partner (not a corporation) failed to hand over to the CRA are held under a deemed trust that survives the individual's own bankruptcy, so that specific piece doesn't get discharged the way an ordinary debt would. GST/HST works differently — the deemed trust CRA holds over unremitted GST/HST does not survive a bankruptcy the same way, and an individual's personal liability for GST/HST is generally still dischargeable, even though CRA may make repaying some of it a practical condition it pushes for before signing off on a proposal. Separately, under section 172.1 of the Bankruptcy and Insolvency Act, an individual with more than $200,000 of personal income tax debt that makes up 75% or more of their total unsecured debt doesn't get an automatic discharge at all — a court hearing is required, a materially higher bar than the ordinary bankruptcy process most other unsecured debtors go through.

What this means if you owe the CRA money

Don't assume a private creditor's rules apply. A collection call from the CRA, or a Requirement to Pay landing on your employer or bank, doesn't require the lawsuit-then-judgment sequence an ordinary creditor needs first.
A written acknowledgment or partial payment can restart the ten-year clock. If an old CRA debt has gone quiet for years, get advice before contacting CRA about it or making any payment toward it, rather than assuming the debt has simply expired.
Bankruptcy or a consumer proposal doesn't automatically erase every dollar you owe CRA — source deductions held in trust are the clearest exception, and a very large personal income tax debt can require a court hearing rather than an automatic discharge.
A licensed insolvency trustee or tax lawyer, not a credit-repair or debt-settlement company, is who actually has standing to negotiate directly with CRA collections or file the insolvency paperwork described above.

None of this is legal or tax advice for a specific account — a real dispute over an assessment, a collections action, or how a specific bankruptcy or proposal treats a specific CRA debt is a conversation for a tax lawyer or licensed insolvency trustee, not a general explainer.

Related: see how wage garnishment works in Canada and CPP/OAS/EI garnishment in Canada for the Requirement to Pay in full, Canadian bankruptcy and consumer proposals for the general insolvency process, and how the IRS collects a tax debt for the U.S. equivalent.