You’ve discovered that the Canada Revenue Agency has obtained a court order to seize your assets in payment of overdue taxes and the first step they took was to freeze your bank account. In most cases, CRA freezes your bank account for one simple reason: to get your attention. In my experience as a bankruptcy trustee in Canada, it’s not the amount of money that you owe Revenue Canada that will cause them to freeze your bank account. It’s more likely that you have ignored previous demands to pay, have not filed your taxes for one or more years, or you are not co-operating with CRA, and they believe they need to get your attention.
How To Deal With CRA Once Your Account Is Frozen
The key is to act quickly. If you continue to ignore CRA demands, they will likely seize your other assets perhaps putting a lien on your home or issuing a wage garnishment. Here are 4 steps to take if your account has been frozen:
- Open a new bank account at a new bank (where you don’t owe any money). It is always prudent to have a “back up” account in the event that any creditor attempts to seize or freeze your account. It is possible that CRA has notified all banks, so initially it may not be wise to deposit money in this account, but you should open it now in the event that the steps listed below are not successful.
- Call CRA. Talk to the collector and determine why they have frozen your bank account, and ask what you can do to have it un-frozen. If the issue is missing tax returns, CRA may agree to release your bank account if you agree to file the missing returns within the next week. If you owe money, they may agree to a payment plan in return for un-freezing your bank account.
- Determine what you can afford to pay. As a general rule, CRA will only consider a payment plan with you if you have exhausted all other options available for raising money including borrowing and selling off assets. In addition, they usually require you to commit to paying all of your tax arrears within the next year. If you need more than a year, they probably won’t work with you, which leads to the final step.
- If you don’t think you can pay back your outstanding tax arrears within the time required by CRA, you may need to file a consumer proposal or personal bankruptcy. Both a proposal and a bankruptcy are legal processes that allow your consumer proposal administrator or bankruptcy trustee to issue a “stay of proceedings” to both CRA and the bank to un-freeze your account. (Since it may take a period of time for the bank to respond, an alternate bank account is suggested, as noted in the first point above).
Once you have filed your proposal or bankruptcy it is essential that you have a plan in place to file and pay all future taxes owing. We strongly suggest that you meet with a licensed bankruptcy trustee to review these options in detail.
Would a personal bankruptcy be an option if the CRA has frozen your account for other owed money not related to taxes? The have frozen mine due to a defaulted student loan that had been turned over to them. They would not work with me regarding payments that I could actually afford and so I ignored them and got into this mess. I just really want to start fresh!
Hi Jane. Yes, the situation you describe could be solved by filing personal bankruptcy.
CRA took $20,000 from my personal savings account. How was that possible? Is that allowed by law? Which particular law?
I did not receive any court order. I am late with taxes due to both my children succumb to schizophrenia in the last few years. What are my options? I have been paying taxes for 23 years. I would usually be 3 years late and then paid penalties and interest. This time it was 5 years late due to health issues with my children
Hi Kumar. Yes, CRA has the ability to seize money from your bank account if you are behind on your taxes. Unlike most other creditors, they do not require a court order.
my father has had his account frozen due to a ministry of finance bill. long story short ,, he was driving someone who was purchasing untaxed cigarettes. is there an optiion to have this bill declared on bankruptcy . Its rather large. over $14,000
Hi Michele. Taxes are included in a bankruptcy, fines are not, so it would depend on the nature of the debt. I would suggest that he contact a Licensed Insolvency Trustee to review his circumstances.
Hi, can CRA access safety deposit boxes in the bank or freeze the asset in your safety deposit box?
Only if they obtain a Court Order to gain access to the box…
Theoretically, yes, although that would be an unusual step for them to take. It is much more common for them to seize funds in a bank account, since that’s a much simpler process for them.
Can the CRA freeze USA credit union accounts?
If the account is at a credit union in the United States, it is difficult but not impossible for CRA to freeze it. If it’s a US Dollar account at a credit union in Canada, then it is relatively simple for CRA to freeze it. A licensed insolvency trustee can review your specific situation and explain in more detail.
Can I still pay off over draft and personal line of credit with a freeze on account
If you have funds in a frozen account, you won’t be able to use those funds to repay other debt. If you have other funds not in the frozen account you can use them as you wish, but you should talk to the bank first to make sure that whatever money you apply to cover your other debts isn’t also taken.
So here I am I wished to open negotiations with one of QRevenu Agent.
Last I tried was to talk with the higher manager of this situation.. Never had any recalls just one more letter stipulating a seizure of my assets and bank account
What should I do now? amount is 10,500 plus interest as they never would stop the machine as they quoted.. Untill all is pain in full
Now I see my work place has been also advised..
What atre my legal rights?
Thanks.. Head is full of noises.
Hi Gerrit. I strongly recommend that you contact a licensed insolvency trustee. If they have contacted your work they are in position to garnishee your wages, and that can only be stopped by you paying them in full, or by filing a consumer proposal or bankruptcy, so it’s important for you to act quickly.
Hello my husband owes 7000 to the CRA. We are not financially capable of making such payment. The collector had given him a few(3times) to make a payment and was not able to do so. At a time he requested for payment installments but she didnt agree to it. They freeze his bank account as of yesterday. His name is on his parents mortgage. Need help because his bills payment come out from the account. Should he call and speak to her to start monthly payments?
Hi Ivy. Yes, the first step would be to call CRA and see if they will unfreeze the bank account so that your husband can start making payments. If they won’t agree to that, or if he doesn’t have the money to make the payments, the next step would be to talk to a licensed insolvency trustee to see if a more formal option is necessary.
Revenue Canada has frozen my husband’s bank account, He is self employed, and owes taxes every year, of course, he is not incorporated which makes things harder for us at tax time. We owe $26,000, we had previously owed over $30,000 after we filed our taxes for 2017, but we have been making payments, our last payment of $1000 was made in December of 2018. We missed paying for January & February b/c of money owed to him, that didn’t come in. They froze his account last Friday, there was no phone call or letter. He had to track the previous government employee down that he usually dealt with, and she no longer worked there, they transferred him to a Government employee in Manitoba. He tried to work out a payment plan with her, but she would’nt hear of it, and proceeded to ask him how we could afford to have 2 vehicles if we can’t pay our income tax, and wants copies of all our bank statements and our expenses every month….I don’t know why we have to send her all that if the tax has to be paid in full anyway….I am not sending that, we have enough stress as it is, I never heard of that unless it was an Audit. Anyway what can we do?
Hi Annette. Contact a Licensed Insolvency Trustee immediately. If you can’t convince CRA to un-freeze the account, it may be necessary to do something more formal to deal with this issue. CRA has the power to freeze bank accounts without a court order, so the sooner you contact and LIT the sooner your husband can make a plan to deal with CRA.
Hello sir .
My bank just called me to notify me that CRA has frozen my account . They told i owe $40,000.
I am 9 years behind of my income tax .
What are my options?
Is bankruptcy a solution not to pay .
I don’t believe I do owe them that much .
Please advise .
A general word to everyone reading this blog – it is NOT illegal not to pay your taxes. It is illegal not to file. CRA takes a very dim view of people that do not file as required by law…
To answer your question, if you file for bankruptcy your bank account will be unfrozen. If there is any money still in the account at that time CRA will no longer have the right to take it. Unfortunately, any money CRA has already taken from the account can’t be recovered. In addition, if you file for bankruptcy your unpaid taxes will be included (eliminated) in the bankruptcy.
If you actually file all of the outstanding tax returns CRA may very well re-assess those years based on the new information and possibly reduce the amount you owe. Right now, CRA has simply exercised their right to arbitrarily assess how much you owe for any year you haven’t filed a return. CRA almost always guesses a high number in the hopes you will actually file your return…
It will be worth your time to contact a licenced insolvency trustee to at least discuss you options…
I was contacted by letter from CRA as the director of a company that ceased operations April 23, 2014. In July of the same year the Corporation was sued by a supplier and a default judgment rendered against the corporation. Subsequently the corporate bank account was seized 1 week prior to the final GST filing. The final GST was filed, the CRA notified of the seizure of accounts, the court was notified of the debt to CRA for final GST owing.
Here I am almost 5 years later receiving a demand notice for over $13,000 with no notifications over the past 4 years and 11 months until this one of any balance owing.
In September 2016, I filed a personal consumer proposal and am still making payments under that arrangement. What should I do?
Contact your trustee – if the CRA debt predates the date you filed your proposal then CRA should be Stayed (prohibited) from taking collection actions against you. Did you ever resign as a Director of the corporation? Normally CRA has 2 years from the date a corporation ceases to operate to raise Directors’ Liability. If the corp was never properly closed, if it did not file final HST returns and de-register, CRA may take the position that the corp didn’t actually cease to operate and that is why they are finally taking action now.
Alternatively, you may speak to a lawyer, but I would start with the trustee administering your proposal.
Hello I am in a sticky situation. I filed for bankruptcy but did not finish it. It’s been 2 years and now I contacted my trustee to finish and they sent me info I needed to do to finish it and go before court etc. But one of the requirements is to file my taxes for last 2 years which I have not done. I am self employed and do to mental illness I was very unorganized. I would estimate I owe 30-40000 in those 2 years to CRA. I obviously can not pay that in one some or a 1 year payment plan…. I really want to get my life sorted out and it seams so stressful like my life is ruined. I’m not sure how to proceed I want to finish my bankruptcy and start new. Any advice is good thanks
Hi James. This would be a discussion to have with your trustee. Most likely they want the tax returns filed to prove that you didn’t have any extra surplus income, which may have an impact on your discharge. Of course CRA also wants them filed. If there is a significant amount of tax debt owing from after you filed bankruptcy, it may be necessary to complete your bankruptcy so that you can then deal with your post-bankruptcy tax debt, either directly with CRA, or through a consumer proposal or another bankruptcy.
I just found out that CRA has frozen one of my business accounts about a week ago. It is my old business account that I only still had open to pay a couple pre-authorized monthly payments and I’ve been meaning to get those switched over and close that account down. My new business banking account hasn’t been touched yet. Should I expect this one to be frozen too? or is it safe to transfer my pre-authorized payments over to that account and keep using it while I deal with my CRA mess?
Hi Pat. If you have not filed a consumer proposal or bankruptcy CRA can continue to take these actions; whether or not they freeze your other account will depend on whether or not they are aware of your other account. I would suggest you either make arrangements directly with CRA, or consider your other options to formally eliminate the debt.
I just found out that the Receiver General froze my bank account, for a very small payment that they deposited months ago by mistake. I have been communicating back and forth with the government and my bank about how to make payment arrangements because freezing my account for full payment will actually cause a huge financial mess before the month is finished. The government said I have to make payment arrangements through my bank, and my bank said I have to make payment arrangements through the government, so since I am getting nowhere for the last three days they have taken all the money out of my account, I have zero dollars to my name, but because I don’t make very much money all I have is my CCB, which is what they took. I already am in financial distress, I was then told this morning that all 5 major banks will have received the same letter and that there is nothing I can do and any and all accounts that have my name on them will be frozen. Because of this very extreme action, I have no choice to file for bankruptcy, I can’t even put food on my table now for my kids. I haven’t slept for three days, I have been very worried and stressed, no one helped me resolve this, and now I really don’t know what to do, or who is even telling me the truth the government or my bank. All I keep saying to both parties this was done with no notice to me, and no option to make a payment plan.
I am sorry you have to go through this – make sure your trustee is aware of the history and the problem so they can sort this out for you…
I got a letter stating my bank account was frozen and i owe $250,000. I have not filed for close to 10 years. I didn’t even make $250,000 in that time frame in gross income. How can i be charged that much? What should I do?
The bad: CRA has the right under the law to “arbitrarily assess” your income for any year you don’t file a tax return. Once assessed it becomes a legally binding debt.
The good: in almost every case, if you file all of the outstanding returns then CRA may re-assess each of the years and adjust the amount owing to a more realistic number. Keep in mind CRA charges 24% interest on outstanding debts so if you haven’t filed in 10 years the interest and penalties are going to be HUGE.
So, to sort this out you need to decide if you will try and file all of the outstanding returns so you have a realistic tax debt or if you’ll just deal with the number CRA says you owe. Once you know that you can decide if you need to speak to a licenced insolvency trustee to deal with the tax (and any other) debts you may have.
Do you have any idea how many days they need to proceed to return my money? CRA made a mistake that they mix up my name with another people so they legal demand all my money. However, I have been waiting for 4weeks after they found the mistake. But every time I called them they just said I need to wait. I can’t wait anymore because I have no money to live on! Also it is not my fault. Is there anything I can do?
Hi Vicky. Unfortunately there is no way to speed up CRA, other than calling them every few days and asking them when your refund will be processed.
The cra has seized my corperate account
The day I owe them 196000 in Gst
I was in a serious accident and I am disabled
I am the director of my corporation
I don’t receive a pay check
I am 2 years behind on my corperate filings
I am trying to get my returns in order but my brain injury has left me a mess
Everything is disorganized and I don’t know where to start
What can I do
Does rev can have a policy for those that are disabled in accidents
Do they have compashion
It sounds like you need to speak to the CRA collector about these debts. $196,000 in HST means you’ve had sales of $1.5 million. It will be hard for CRA to overlook those kinds of numbers. If you can’t deal with your accounting yourself then you should hire an bookkeeper or an accountant to help you. CRA will come and do an audit, but it isn’t there job to save you money. The CRA auditor will prepare your books in the most basic (easiest) way. Once CRA figures out how much you actually owe they do have something called the Fairness Commission to provide relief to people in your situation. Unfortunately, before you can apply to Fairness you have to file all of your outstanding returns. Good luck.
Hi, I have a question. CRA has frozen my husband’s account. He failed to do his taxes, which he has just submitted. CRA claims he owes 77,000. Once he received the adjustment it will be lower. He has just sent 45,000. Hopefully this will cover the new amount owing. He’s a subcontractor, his next check obviously cant hit his account, until this is resolved. If I take his check and cash it in my account different bank. Can I be in trouble?? Or should he just go to money mart. As we need the money to pay bills in the mean time. Thank You. Looking forward to your reply.
If it is cashed through your account then you are inviting CRA to freeze your account too next time they have any issues with your spouse. Normally people ask if they should open a new bank account – that will work until CRA finds the new one. Money Mart will work, but cost you…
Im 21 and recently had my bank account frozen due to bad check and suspicious activity. The bank contacted the government and the bank was told that my account was frozen due to me depositing checks from the government that were more than 6 months old. I have aound 34k in my savings but less than 100$ in my checkings. The bank confiscated my debit card and i no longer have access to any of my money.
I am wondering how long it will take for the bank or cra to solve this matter?
I would definitely be capable of paying back the bad checks since it is definitely less than 1000$, so I wonder if I would be able to get my account unfrozen as long as I am able to pay back the amount of bad checks thats due. Thanks.
I am sorry, but you need to contact the Ombudsman for Financial Services if you have a dispute with a bank (https://www.obsi.ca/en/index.aspx).
Cra put a freeze on my account so I called and talked to the gentleman over $8000.00 in taxes yes I did ignor them as well so we came up with a verbal agreement for the payback over 12 months an he agreed and said he would send a letter immediately to head office of bank for it to be released he told me it would be 3 business days and I also asked him I could make the first payment as soon as I had access to my bank account he agreed and said yes. At the time we were speaking my account was sitting about 4600.00 I looked today and it’s zero they took it all I just don’t understand going throw the steps of creating a verbal agreement with me and not follow through on his end of the said agreement and proceeded to tell me he sent the letter as we were speaking and all calls are monitored like they say
If you have the name and number of the person you spoke with at CRA give them a call and ask them for an explanation. Perhaps it can be reversed? You won’t know until you ask.