1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

What happens if I can't pay the income tax that I owe?

By

Question: What happens if I can't pay the income tax that I owe?
Answer:

First of all, even if you owe more taxes than you can pay by the income tax filing deadline, you should still file your income tax return on time to avoid late-filing penalties. (See the Income Tax FAQ "What happens if I don't file my income tax on time?".)

Once the CRA has processed your income tax return, they'll send you a Notice of Assessment. If the Notice of Assessment shows an income tax balance owing that you can't pay immediately, you should contact a tax services office, which will help you set up a mutually acceptable payment schedule. This page of the CRA Web site has links to tax services offices throughout the country.

It's important to let the CRA know about the problem and arrange a payment schedule as quickly as possible, because daily compound interest is charged on any unpaid income tax balance, starting on the annual filing deadline and continuing until you've paid the income tax you owe in full.

Back to > Canadian Income Tax FAQ Index

Back to > Small Business Canada FAQ Index

©2014 About.com. All rights reserved.