CRA Wage Garnishment Rules Canada - How Much Can They Take? 2026

CRA wage garnishment occurs when the Canada Revenue Agency issues a Requirement to Pay to your employer without court approval, directing them to send up to 50 percent of your net pay (or 100 percent for contractors) directly to CRA until your tax debt is paid, and you can stop it immediately by filing a consumer proposal or bankruptcy that triggers a legal stay of proceedings, or by negotiating a payment arrangement that may (but doesn’t guarantee to) pause garnishment. Most Canadians facing CRA garnishment choose consumer proposals because filing stops garnishment within 24 to 48 hours while reducing debt by 60 to 80 percent and keeping all assets. Federal CRA garnishment exceeds provincial limits that restrict regular creditors to 20 to 30 percent of wages after obtaining court judgments. If you’re unsure whether a consumer proposal is right for your situation, understanding the warning signs helps you make informed decisions before garnishment depletes your income.

Understanding how CRA’s Requirement to Pay works, garnishment calculation methods, and immediate stop options helps you restore your full paycheque and resolve tax debt.

How Does CRA Wage Garnishment Work?

CRA wage garnishment begins when CRA sends a Requirement to Pay directly to your employer specifying the garnishment amount or percentage. The Requirement to Pay is issued under the Income Tax Act without court approval, judgment, or hearing. Your employer must comply immediately or face personal liability for your full tax debt amount.

The RTP letter directs your employer to calculate your net pay and remit a specified percentage to CRA before issuing your paycheque. Net pay equals gross wages minus Canada Pension Plan or Quebec Pension Plan contributions, Employment Insurance or Quebec Parental Insurance Plan premiums, federal or provincial income tax deductions, and union dues. Some RTP letters specify exact dollar amounts while others require employers to call CRA for garnishment calculation instructions.

Garnishment continues until CRA receives full payment of your tax debt, you negotiate a payment arrangement that pauses collection, or you file bankruptcy or a consumer proposal triggering legal protection. Employers cannot refuse or reduce garnishment amounts without CRA authorization.

How Much Can CRA Garnish from Your Wages?

CRA garnishes up to 50 percent of net pay for employees in standard employment relationships. Contractors, self-employed individuals, and freelancers face garnishment of up to 100 percent of receivables, invoices, and payments from clients. The garnishment percentage varies based on your financial circumstances including income level, dependents, and necessary living expenses.

Net pay calculation for garnishment purposes is gross wages minus mandatory deductions only. CRA does not consider voluntary deductions like RRSP contributions, charitable donations, parking fees, or optional insurance when calculating the garnishment base. A $4,000 gross monthly paycheque with $800 in CPP, EI, and tax deductions yields $3,200 net pay, allowing CRA to garnish up to $1,600 per month.

Federal CRA garnishment authority supersedes provincial garnishment limits of 20 percent in Ontario and 30 percent in British Columbia and Quebec. Calculate your potential garnishment amount using the wage garnishment calculator.

What Is the Difference Between CRA and Regular Creditor Garnishment?

CRA garnishment requires no court order while regular creditor garnishment requires suing you, obtaining judgment, and applying for a provincial enforcement order. This court process takes three to six months and costs creditors $2,000 to $5,000 in legal fees. CRA issues a Requirement to Pay within weeks of collection escalation.

Provincial garnishment laws limit regular creditors to 20 to 30 percent of gross wages depending on the province. Ontario caps garnishment at 20 percent of gross pay under the Wages Act. CRA’s federal authority under the Income Tax Act allows garnishment up to 50 percent of net pay, often double the amount regular creditors can seize.

Provincial limitation periods of two to six years do not apply to CRA debt collection. CRA has six to ten years to collect depending on debt type and acknowledgment. Learn how to stop general wage garnishment from regular creditors and compare provincial rules in the Ontario guide.

How to Stop CRA Wage Garnishment Immediately

Three methods stop CRA wage garnishment with different timelines and financial outcomes. Filing a consumer proposal creates a legal stay of proceedings the day your Licensed Insolvency Trustee files electronically with the Office of the Superintendent of Bankruptcy. Your employer receives notice within 24 to 48 hours through registered mail or direct contact from the trustee, and your next paycheque is restored to full amount.

Consumer proposals reduce your CRA debt by 60 to 80 percent over three to five years while keeping all assets including your home, vehicle, and tax refunds. The stay of proceedings remains in effect throughout your proposal term as long as you make monthly payments. Creditor acceptance rates reach 97 to 99 percent when proposals are structured by Licensed Insolvency Trustees.

Bankruptcy provides the same immediate stay of proceedings stopping garnishment within 24 to 48 hours. First-time bankruptcy discharges in nine to 21 months eliminating 100 percent of CRA debt including income tax arrears, GST and HST balances, and penalties and interest. You must surrender non-exempt assets and make surplus income payments if your income exceeds federal thresholds.

Payment arrangements with CRA may pause garnishment but provide no legal guarantee. Call CRA Collections at 1-888-863-8657 to propose monthly payments based on your income and expenses. CRA assesses your financial situation and may suspend active garnishment during compliant payment plans, but garnishment resumes immediately if you miss payments. Compare all CRA debt relief options including timeline and cost differences.

Can You Negotiate to Stop CRA Garnishment?

Negotiating a payment arrangement sometimes pauses CRA garnishment but success depends on your demonstrated ability to pay and CRA’s collection priorities. Call CRA Collections at 1-888-863-8657 and request to speak with a collections officer. Prepare documentation of your monthly income, necessary living expenses including rent or mortgage and groceries, and other debt obligations.

CRA assesses whether your proposed monthly payment exceeds what they collect through garnishment after accounting for your basic living needs. If you offer $600 per month and current garnishment yields $500 monthly, CRA may accept the arrangement and suspend garnishment. However, this pause is not legally guaranteed and CRA can resume garnishment without notice if you miss even one payment.

Payment arrangements leave you paying 100 percent of principal debt plus three percent annual interest with no debt reduction. A $30,000 CRA debt paid over five years costs $30,000 plus approximately $2,400 in interest totaling $32,400. A consumer proposal for the same debt typically settles for $9,000 to $12,000 over four years, saving $20,000 to $23,000.

The stay of proceedings in consumer proposals and bankruptcy provides guaranteed garnishment stops that CRA cannot override. Compare payment arrangement costs against proposal savings using the CRA debt calculator.

What Triggers CRA Wage Garnishment?

CRA wage garnishment follows an escalation sequence beginning 90 to 180 days after missed tax payment deadlines. CRA sends three to four demand letters spaced three to four weeks apart requesting full payment and warning of collection consequences. Letters increase in urgency from standard payment reminders to formal demands stating legal action will commence. Federal workers facing 2026 layoffs should be especially aware that CRA garnishment can begin while severance negotiations are ongoing, potentially reducing termination pay before you receive it.

If you do not respond or arrange payment after final demand letters, your file transfers to CRA Collections division. Collections officers call and send registered mail offering one final opportunity to arrange payment before enforcement actions begin. The Requirement to Pay can be issued at any point after Collections assumes your file, often within two to four weeks of Collections contact.

CRA may implement garnishment before seizing bank accounts or registering liens on property, especially if garnishment yields higher monthly collection amounts. Proactive contact with CRA Collections before garnishment often results in payment arrangements that prevent enforcement. However, once garnishment begins, negotiating removal requires demonstrating financial hardship and proposing alternative payment exceeding garnishment yields. If job loss triggered your inability to pay CRA, acting quickly before garnishment begins preserves more options and protects severance or EI benefits.

Review all CRA debt relief options including Taxpayer Relief for penalties and interest if genuine hardship caused your payment default.

Does Filing a Consumer Proposal Stop CRA Garnishment?

Filing a consumer proposal stops CRA wage garnishment the day your Licensed Insolvency Trustee files electronically with the Office of the Superintendent of Bankruptcy. The filing creates an automatic stay of proceedings under Section 69 of the Bankruptcy and Insolvency Act. This legal protection prevents all unsecured creditors including CRA from continuing or starting collection actions including garnishment, bank freezes, lawsuits, and collection calls.

Your employer receives legal notice to stop wage garnishment within 24 to 48 hours through registered mail from the Licensed Insolvency Trustee or direct contact from CRA’s legal department updating the Requirement to Pay status. Your next paycheque after notice is restored to full amount with no garnishment deduction. The stay remains in effect throughout your three to five year proposal term provided you maintain monthly payments.

Consumer proposals reduce CRA debt by 60 to 80 percent with 97 to 99 percent creditor acceptance. A $40,000 CRA debt becomes $8,000 to $16,000 paid over four years at $167 to $333 per month. You keep all assets including your home, vehicle, RRSPs, and tax refunds. Licensed Insolvency Trustee fees are paid from your monthly payments under federal tariff—no upfront costs.

Calculate your potential monthly consumer proposal payment and savings compared to garnishment using the CRA tax debt calculator. Book a free consultation with a Licensed Insolvency Trustee to review your eligibility and stop garnishment within 48 hours. Ottawa residents facing CRA garnishment can access local Licensed Insolvency Trustees familiar with federal employee situations and NCR-specific collection patterns.

Bottom Line

CRA wage garnishment takes up to 50 percent of net pay for employees or 100 percent of receivables for contractors without court orders through federal Requirement to Pay authority that bypasses provincial garnishment limits of 20 to 30 percent applying to regular creditors. Three stop methods include filing a consumer proposal for immediate stay of proceedings restoring wages within 24 to 48 hours while reducing debt 60 to 80 percent with 97 percent acceptance, filing bankruptcy for same immediate stay with 100 percent discharge, or negotiating payment arrangements that may pause garnishment but provide no legal guarantee and resume if payments are missed. Consumer proposals offer the best outcome for most Canadians combining guaranteed garnishment stop, substantial debt reduction, asset protection including tax refunds, and fixed payments that never increase even when income rises.

Contact a Licensed Insolvency Trustee for a free consultation to stop CRA garnishment within 24 to 48 hours.

This article provides general information about CRA wage garnishment and should not be considered legal or financial advice. Consult a Licensed Insolvency Trustee or tax professional for advice specific to your situation.

Last updated: February 2, 2026