Owing the CRA: paying a balance, interest and payment plans

If you owe tax for the year, your notice of assessment shows it as “Amount due”. Pay by the due date if you can. If you can’t, file on time anyway, pay what you can, and arrange to pay the rest over time. Ignoring a debt doesn’t make it go away: interest keeps adding up and, eventually, the CRA can take collection action.

When it’s due

For 2025, any balance owing is due April 30, 2026. That holds even if you or your spouse or common-law partner were self-employed and have until June 15 to file. If the due date falls on a Saturday, Sunday or a public holiday the CRA recognizes, your payment is on time if the CRA receives it on the next business day.

From the day after the due date, the CRA charges interest, compounded daily, on any unpaid amount, including amounts added later by a reassessment.

One quirk: if your notice of assessment was issued before your payment arrived, it can still show a balance owing even though you’ve paid in full. Your CRA account shows whether the payment has been received.

Ways to pay

• Online banking. Some banks and credit unions let you add the CRA as a payee.
• My Payment. The CRA’s own online service, for one-time payments by debit card. It doesn’t take credit cards.
• Pre-authorized debit. Set up one or more scheduled withdrawals from your chequing account in your CRA account, at least five business days before the first one.
• At a bank or credit union counter, with a remittance voucher.
• At Canada Post, by debit card or cash. You need a customized QR code first, and Canada Post charges a fee.
• Through a third-party payment provider. Some accept credit cards or Interac e-Transfer and pass the payment on, for a fee.
• By mail, with a cheque in Canadian funds and a remittance voucher.

The CRA never accepts cryptocurrency, gift cards, traveller’s cheques, cash by mail, or foreign currency.

Filing late versus paying late

They’re charged differently:

• Paying late costs interest. The rate can change every three months, following the CRA’s prescribed interest rates.
• Filing late while owing tax adds a late-filing penalty on top: 5% of the balance owing, plus 1% of it for each full month late, up to 12 months. It’s 10% plus 2% a month, up to 20 months, if you were penalized for one of the three previous years after a demand to file.

So if you can’t pay, file on time anyway: that avoids the penalty, and only interest runs. If the deadline has already passed, see missed the filing deadline?

Can’t pay it all? Arrange to pay over time

The CRA’s personal income and expense worksheet can help you work out what you can afford each month. Then:

• Online: in your CRA account, choose “Proceed to pay”, then “Schedule a series of payments”, to set up automatic pre-authorized debits for a personal income tax debt.
• By phone: the CRA’s automated TeleArrangement line handles personal income tax debts, or you can call and speak to an agent. If a collections officer has written to you, call the number in their letter.

The arrangement starts with your first payment. After that, make every payment on the agreed dates, file all future returns on time, and keep up with your other tax obligations. If you need to change the plan, call the CRA before you pay less than agreed; otherwise it can move to legal action. Interest keeps running on what’s unpaid, and the CRA may still apply benefit and credit payments to your debt while you’re paying.

If you don’t pay

• Your refunds and benefits go to the debt. The CRA applies tax refunds and government credit or benefit payments you’re due, such as the Canada Groceries and Essentials Benefit, to what you owe.
• Warnings come first. If you haven’t arranged to pay, or you miss scheduled payments, the CRA generally tries at least once to warn you by phone and sends one written legal warning before taking legal action.
• Then legal action. That can mean garnishing your income or accounts, making another person responsible for your debt, or putting a lien on or seizing your assets.

If someone calls about a debt you’ve never seen on a CRA notice, check your balance in your CRA account or by calling the CRA before you pay anything.

Asking to cancel penalties and interest

The CRA may cancel or waive penalties and interest, though not the tax itself, when events beyond your control kept you from meeting your tax obligations, and in some other situations. It considers every request, but meeting its criteria doesn’t guarantee relief. Situations it lists include:

• a natural or human-made disaster, a postal strike or other service disruption,
• serious illness or an accident, or serious emotional distress such as a death in the immediate family,
• financial hardship (for interest), where paying it would make it hard to provide basic necessities such as food, shelter or medical care for a long time,
• a CRA error or delay.

Requests can only cover penalties for tax years ending in, and interest that built up in, the 10 calendar years before the year you ask. Apply in your CRA account under “Accounts and payments” (choose “Request relief of penalties and interest”), or mail Form RC4288. Describe what happened and how it stopped you from paying or filing, and include documents that back it up. For financial hardship, you may need a statement of your income, expenses, assets and liabilities (Form RC376) and documents such as recent bank statements.

Think the amount is wrong?

If you believe the CRA assessed you incorrectly, you can object. In most cases you don’t have to pay disputed income tax until the objection is reviewed, but interest still adds up on the amount while it’s in dispute. See changing your return, and disputing an assessment.

Avoid a big bill next year

If your net tax owing is over a threshold the CRA sets, both this year and in either of the two previous years, you may have to pay tax in instalments during the year rather than in one lump sum. See paying tax by instalments.

Quebec residents

Your Quebec return is filed with Revenu Québec, not the CRA. For Revenu Québec’s interest and payment agreements, see the Quebec section of missed the filing deadline?