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May 26, 2017

Asset forfeiture: What enforcement measures can the CRA use?

What happens when residents of Ontario fail to pay their taxes on time? Those who do not cooperate with the Canada Revenue Agency may be subject to asset forfeiture. The CRA has several avenues of enforcement. The legal and financial consequences can be severe, and collection action will usually not be suspended until the debts are settled in full. However, individuals who can demonstrate that they are suffering undue hardship may be able to negotiate an arrangement with the CRA.

The CRA has the power to use money owed by a federal agency or department (such as a GST/HST credit) as a set off against a person's unpaid taxes. It can also issue garnishments to order employers or other third parties to withhold money that is due to the individuals with tax debts. If the individual is also a business owner, the CRA could garnish the accounts receivable of the company to cover unpaid taxes.

Furthermore, the CRA can obtain a judgment from federal or provincial courts. To do this, the CRA registers the debt with the court to get a certificate that confirms the amount of tax owed to the Crown.

Seizing a person's assets and selling them to cover tax debts is the most drastic step the CRA can take if all the other measures fail. Assets that could be seized include a home, rental property, cottage, boat, car, artwork and more. Business assets and property can also be confiscated.

Under certain circumstances, the CRA can even hold business partners or other third parties responsible. This is certainly not a position in which any Ontario resident wants to be. A wise first step is to consult with an experienced lawyer. He or she can act as the first line of defence against asset forfeiture action by the CRA by providing skilled advocacy focused on protecting the client's financial interests.