CRA Debt Calculator Canada - Payment Plan & Relief Options 2026

A CRA debt calculator estimates your monthly payment options for Canada Revenue Agency tax debt, including direct payment arrangements, Taxpayer Relief Program eligibility, and consumer proposal settlements. CRA has extraordinary collection powers that regular creditors don’t have—they can garnish wages up to 50% without a court order, freeze bank accounts without warning, and collect for 6-10 years. This calculator helps you understand which relief option makes sense: CRA payment plans over 10 years with ongoing interest, Taxpayer Relief for penalty cancellation, consumer proposals that eliminate 60-80% of CRA debt with legal protection, or bankruptcy as a last resort.

How to Use This CRA Debt Calculator

Enter your total CRA debt including principal tax owed, accumulated penalties, and interest charges. Include all debt types: income tax arrears, GST/HST debt, source deduction debt, CPP/EI contributions, and benefit overpayments. Add your gross monthly income and monthly essential expenses (housing, food, utilities, transportation, dependent care).

The calculator shows four scenarios: monthly payment under a 10-year CRA payment arrangement with continuing interest at current rates (~6-8% annually), estimated savings if Taxpayer Relief approves penalty and interest cancellation, consumer proposal monthly payment with 60-80% debt reduction, and bankruptcy cost if you have no income or assets. Results include total amounts paid, timelines, and legal protections for each option.

Understanding your results requires knowing CRA’s collection timeline. Unlike regular creditors bound by 2-6 year provincial statutes of limitations, CRA has 6-10 years to collect depending on debt type, and the limitation period can restart with any payment or debt acknowledgment. This extended collection power makes CRA debt more urgent than typical unsecured debt.

Why CRA Debt Requires Immediate Action

The Canada Revenue Agency holds special collection powers granted by federal legislation that bypass normal creditor restrictions. This makes CRA the most aggressive creditor you’ll face.

CRA can issue Requirement to Pay (RTP) notices to your employer, bank, or customers without suing you first. Your employer receives an RTP and immediately begins deducting up to 50% of your gross wages, sending it directly to CRA. Your bank receives an RTP and freezes your accounts, surrendering the balance to CRA. If you’re self-employed, CRA can issue RTPs to your clients, intercepting your business income.

The collection timeline of 6-10 years (versus 2-6 years for regular creditors) means CRA debt rarely becomes statute-barred. Tax debt from 2016 remains collectible in 2026, while a credit card from 2016 would be expired in most provinces. This extended window makes ignoring CRA debt financially devastating over time as interest compounds at 6-8% annually on top of existing penalties.

Your Four CRA Debt Relief Options

Option 1: Consumer Proposal (Most Popular)

A consumer proposal is the most effective CRA debt relief tool for individuals with total debt between $10,000 and $250,000. CRA is bound by the Bankruptcy and Insolvency Act and must participate in proposals—they have no choice. Historical data shows 87% acceptance rates when CRA debt is included, slightly lower than the 97-99% overall acceptance rate due to CRA’s tougher negotiating stance.

Proposals stop all CRA collection activity immediately on filing day through a legal stay of proceedings. Wage garnishments cease within one pay period, bank freezes lift once CRA confirms filing, and tax refund offsets stop. You make fixed monthly payments for 3-5 years based on a reduced settlement amount (typically 30-40 cents per dollar), eliminating 60-80% of total CRA debt including penalties and interest. After completion, the remaining CRA debt is legally forgiven and cannot be reassessed or collected.

Option 2: Taxpayer Relief Program

CRA’s Taxpayer Relief provisions allow cancellation or waiver of penalties and interest (but never principal tax) under specific circumstances outlined in Form RC4288. You must demonstrate financial hardship beyond your control, serious illness or disability affecting your ability to pay, actions or errors by CRA that contributed to your debt, natural disasters or civil disturbances, or other extraordinary circumstances.

Approval rates range from 40-60% for genuine hardship cases with proper documentation. Applications are reviewed by CRA’s Collections division and can take 6-12 months for decisions. Successful applications cancel accrued penalties and interest retroactively, but the principal tax amount always remains owing. If your penalties and interest exceed your principal balance, Taxpayer Relief can cut your total debt significantly—a $20,000 debt with $8,000 penalties and $6,000 interest becomes $20,000 (saving $14,000).

Option 3: CRA Direct Settlement

CRA’s collections department has authority to accept reduced settlements through the “fairness provisions” for taxpayers unable to pay in full. Settlement approval rates are 30-40% for individuals, significantly lower than consumer proposal acceptance rates. CRA typically accepts 50-70% of total debt in severe hardship cases (documented medical disability, bankruptcy alternative worse for CRA) or 70-90% in moderate hardship cases (temporary income loss, significant essential expenses).

Settlements require lump sum payment or short-term payment plans (6-12 months maximum). CRA requires extensive financial documentation including income verification, expense breakdown, asset declarations, and written hardship explanation. Negotiations can take 3-6 months with no guarantee of acceptance. If CRA rejects your settlement offer, you’re left with the full debt and ongoing interest accumulation.

Option 4: Payment Arrangement

CRA allows payment plans up to 10 years for taxpayers unable to pay in full immediately. Call CRA Collections at 1-888-863-8657 to negotiate terms. You’ll provide income and expense information to establish an affordable monthly payment. CRA expects monthly payments sufficient to clear the debt within 10 years, though longer arrangements are sometimes approved for severe financial hardship.

The major disadvantage: interest continues accruing at ~6-8% annually throughout the payment period on the full balance. A $30,000 debt on a 10-year payment plan at 7% interest costs approximately $42,000 total. Payment arrangements don’t stop wage garnishment already in place, and CRA can still offset your tax refunds automatically. This is the least favorable option financially but may work for small debts under $10,000 where consumer proposal costs aren’t justified.

CRA Garnishment Limits by Province

While provincial laws limit regular creditor garnishments to 20-30% of wages, CRA operates under federal authority and can garnish up to 50% without any court order. This applies across all provinces regardless of local garnishment protections.

Use our Wage Garnishment Calculator to calculate your exact take-home pay under CRA garnishment and compare it to your essential expenses. If garnishment makes your finances unviable, filing a consumer proposal stops it immediately and provides a path to eliminate the underlying debt.

Which Option Should You Choose?

Choose a consumer proposal if your total debt (including CRA and other unsecured debts) exceeds $10,000, you need immediate legal protection from garnishment or account freezes, you have steady income for 3-5 years of fixed payments, or you want to eliminate 60-80% of your CRA debt with legal certainty. Proposals provide the strongest protection and highest success rates.

Apply for Taxpayer Relief if your penalties and interest exceed 30% of your total CRA debt, you experienced documented hardship (illness, disaster, CRA error), you can afford to pay the principal tax balance, and you’re willing to wait 6-12 months for a decision. This works best as a supplement to payment arrangements, not a standalone solution for large debts.

Negotiate a direct settlement if you have access to a lump sum (inheritance, asset sale, family loan) representing 50-90% of total debt, your total CRA debt is under $20,000 making proposal fees disproportionate, you have documented severe hardship, and you’re comfortable with a 30-40% approval rate. Settlement negotiations take 3-6 months with no guarantee.

Accept a payment arrangement if your total CRA debt is under $5,000 making other options cost-ineffective, you can afford full repayment within 10 years including interest, you don’t need immediate garnishment relief, and you want to avoid the credit impact of proposals or bankruptcy. This is the most expensive option long-term due to continuing interest.

For detailed guidance on all CRA debt relief options, including how to stop CRA wage garnishment, Find a Licensed Insolvency Trustee who handles CRA debt daily.

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Use the CRA Debt Calculator now to compare payment arrangements, Taxpayer Relief savings, and consumer proposal settlements. See which option stops CRA collections and saves you the most money. Enter your total CRA debt and income for results, then consult a Licensed Insolvency Trustee specializing in CRA debt relief.