CRA can impose a garnishment on your income as an enforcement action without the necessity of going to court. Every creditor has to get a court order before being able to take any enforcement action against you. The CRA is not required to give you any warning before imposing any penalties.
CRA income garnishment can be up to fifty per cent of the employment income and up to one hundred per cent of all other sources and types of income that you have and that includes income from sub-contractors. CRA can send a demand intimation to the clients of business owners to re-direct all receivables to them. This is a normal practice when you are facing CRA income garnishment.
A CRA income garnishment can be a cause for a major financial discomfort for you and it can cause severe embarrassment to business owners. It is advisable to take professional help if the CRA is threatening you with CRA income garnishment.
When the process of a CRA income garnishment is initiated, your bank account that is linked to your salary will be frozen. Your bankers and you will receive a letter which is referred to as `Requirement to Pay’. This letter indicates the total amount of your tax debt. Your bankers will be directed to freeze your account. The frozen funds will be held for a specified period of time and then they will be sent to the CRA. If you do not have any alternate arrangements, you will not be able to conduct business or deposit your income. You will not be able to use your bank account to pay your regular bills.
CRA has unique powers unlike the banks or the credit card companies. In the role of a creditor and with the government support, CRA does not require any permission for garnishment. The government offices who are responsible for collecting tax amounts outstanding can get the `Requirement to Pay’ notices issued directly from their office.
It is your responsibility to be proactive and expect enforcement action from the CRA. You will have to react quickly to stop the CRA income garnishment. If you become negligent in your tax obligations and do not file your tax returns in time, you become a problem for the government agencies and you can ask for trouble in the form of CRA income garnishment.
CRA is a creditor who cannot select who it is extending credit to. It will take a hard stand if the tax defaulters go bankrupt and repeat that in the subsequent years. If you are facing CRA income garnishment, you may have some financial options that can allow you to stop the wage freeze. You will have to approach a professional tax consultant to review your financial situation and guide you to secure financing to pay the full tax debts or at least work out a major lump sum payment so that the CRA negotiates and agrees to lift the wage garnishment.