The pay-as-you-go tax system has been adopted by a number of countries including Canada, whereby the taxpayers are required by law to pay their tax as they earn an income. Individuals who do not make their tax payments during the year are obligated to make those payments in full on or before the tax deadline that has been specified by the Canadian Revenue Agency or CRA, as it?s commonly known.

When does a CRA collection action start

In case of non-payment, the CRA has the right to take enforcement action and they do not have to give a warning to the taxpayer or get a court order for doing so. This is to ensure the complete collection of tax for the government.

If individuals are unable to pay off their taxes, the CRA will still collect their taxes either voluntarily or involuntarily, whichever option is necessary. They have specific procedures that they follow for the purpose of collection. Staffers undertake this procedure by first informing the taxpayers about the amount of tax that?s owed by them. They also offer a certain amount of time to taxpayers for setting up a payment plan. If the taxpayers do not take any action, the CRA collection procedure dictates that the assets or funds of the taxpayer will be seized.

CRA collection: payment plan option 

If the taxpayer makes an effort in good faith, the Canadian Revenue Agency will work out a payment plan for them. However, each payment should be made on time or else taxpayers will have to face penalties that can be very severe. If a lump sum is enough to settle the amount, individuals have the option of mailing a check or visit the local CRA office. If a payment plan has been chosen, individuals will be required to pay a specific amount on a monthly basis for satisfying their tax liabilities. Interest will start accruing if the payment is not made on the deadline.

Strict penalties are part of the CRA collection procedure in the scenario where tax is not paid by people in a timely manner and they are unable to pay it. A notice will be sent by the CRA through mail for informing the taxpayer that they intend to collect the tax owed by placing a levy on the individual. The amount owed will also be mentioned on the notice and a short response time is given to individuals before any action is taken. A levy will be placed on any wages or income earned if a response isn?t made to the CRA.

The employer will be contacted by the CRA and a withdrawal of a significant amount will be made from the wage of the taxpayer. The tax deduction will usually be 30% of the paycheck because the CRA is aware that financial survival burden may result otherwise. If the taxes cannot be deducted from the income because there isn?t any, the levy will be placed by the CRA on the home or other assets owned by the individuals. The property and vehicle is possessed and auctioned off in the CRA collection process for clearing the tax dues of the individual.