What if I do not pay my taxes?

Failing to pay your income taxes in Canada can have serious consequences, as the Canadian government relies on tax revenue to fund various public services and programs. The Canada Revenue Agency (CRA) is responsible for enforcing tax laws, and they have mechanisms in place to ensure compliance. Here are some potential consequences of not paying your income taxes in Canada:

1. Interest and Penalties:

   • If you don't pay your taxes on time, the CRA will charge compound daily interest on any outstanding balance, starting from the day after your payment is due.

   • Late-filing penalties may apply if you fail to file your tax return on time. The penalty is calculated as a percentage of the unpaid taxes owing.

2. Garnishment of Wages and Bank Accounts:

   • The CRA has the authority to garnish wages, meaning they can instruct your employer to deduct a portion of your salary to cover your tax debt.

   • They can also freeze and seize funds from your bank accounts to satisfy outstanding tax obligations.

3. Legal Action:

   • If your tax debt remains unpaid, the CRA may take legal action against you. This could involve obtaining a court judgment to collect the amount owed, and they may place liens on your property.

4. Loss of Benefits and Credits:

   • Failing to file your tax return or pay taxes may result in the loss of various government benefits and credits, such as the Goods and Services Tax (GST) credit, Canada Child Benefit, and certain provincial credits.

5. Refusal to Issue Documents:

   • The CRA may refuse to issue certain documents, such as a clearance certificate, which may be necessary for certain financial transactions or real estate transactions.

6. Revocation of Business Licenses:

   • If you operate a business and fail to meet your tax obligations, the CRA may take steps to revoke your business licenses, making it illegal for you to conduct business until the tax issues are resolved.

7. Criminal Charges:

   • In extreme cases of tax evasion, criminal charges may be laid, leading to fines and potential imprisonment. However, criminal charges are typically reserved for cases involving deliberate and significant tax evasion.

It's important to note that the CRA provides avenues for individuals facing financial difficulties to work out payment arrangements and address their tax obligations. If you are unable to pay your taxes on time, it's advisable to contact the CRA as soon as possible to discuss your situation and explore available options.

Ignoring tax obligations can lead to escalating consequences, and seeking professional advice or assistance from the CRA can help mitigate the impact of outstanding tax debts.