When your bank accounts get frozen and you cannot do a thing about it, your personal assets have certainly come in for a total violation. It is embarrassing when you go to a shopping mall and find out that your debit card is declined at a shop. When you check with your bank, you will be informed that the CRA has seized your bank account to settle your tax arrears. Your bank can do nothing about it until you work out some terms with the CRA. You need professional tax assistance when there is a case of a bank freeze by the CRA.
If you are thinking that the CRA will not go to that extent, you are wrong. It can happen. There can be a bank freeze by the CRA and whatever amount you have in your current or savings bank account, it will all go to the CRA towards payment of your tax debts in full. If there is a balance left after that, the freeze will then be lifted from it.
Your tax representatives will familiarize you with what can be seized by the CRA and how you can work towards lifting the bank freeze by the CRA to get your account to work again. Your bank account does not get frozen all of a sudden or overnight. CRA will send you requests and reminders by telephone and through letters for payment of your tax dues in full. It will also expect you to come back to them with a negotiated plan of payment to arrange installments to settle your tax dues. If it finds that there is no response coming from you within a reasonable time, it will seize your assets as lien against the payment of your tax debt. Bank freeze by the CRA is one of such seizures.
In case of a bank freeze by the CRA, you will get a notification in the post. The CRA is sharp in this matter as you will most likely receive this notification only after it has already made a move to seize your bank account. Once your tax arrears are certified by the CRA, it has the full legal power to get the funds in your bank account surrendered to the Agency. Bank freeze by the CRA is initiated through a third party `Requirement to Pay’ letter addressed to your bank. Once the bankers get this notice, they are directed legally to surrender from your bank account to the CRA up to and not in excess of the amount required as per the letter. If the bank balance is less than the amount required to pay, the bank will then direct the full amount on the date it receives the notification and will send you intimation to deposit the balance payable in your account so that payment can be done to the CRA.
CRA gets your bank information from your Social Insurance Number which you provide to your bankers when you open an account with them. This number is an identification giving full details of your Canadian residency status, your bank and employment information. CRA also gets information about your bank by means of the cheques that you have sent to it when paying your tax dues in the past.