CRA Payment Arrangements and Taxpayer Relief 2025

Updated March 2025 · 10 min read · bremo.io

If you owe taxes to the Canada Revenue Agency and cannot pay the full amount immediately, you have options. The CRA offers payment arrangements that allow you to pay over time, and the Taxpayer Relief program can reduce or eliminate penalties and interest in certain circumstances. This guide explains how to access both.

CRA Payment Arrangements

A payment arrangement is an agreement between you and the CRA to pay your tax debt over time in installments. The CRA's objective is to collect the full amount as quickly as possible while considering your ability to pay.

Who Qualifies?

The CRA will consider a payment arrangement if:

• You are not able to pay the full amount right away
• You are up to date on filing all required tax returns
• You are not in a repeat non-compliance situation without good reason
• The proposed payment amount demonstrates genuine ability and intent to pay

How to Request a Payment Arrangement

You can set up a payment arrangement:

• Online: Through My Account on the CRA website using the "Payment Arrangement" feature
• By phone: Call the CRA's Collections line at 1-888-863-8657 (individuals) or 1-800-959-5525 (businesses)
• By mail: Write to your tax services office with a proposed payment plan

Come prepared with: your income and expense details, a proposed monthly payment amount, and the date by which you can begin payments.

What the CRA Considers

When evaluating your arrangement request, the CRA agent will review:

• Your monthly income (employment, self-employment, pension, benefits)
• Your monthly expenses (rent/mortgage, utilities, food, transportation)
• Assets you own (savings, investments, real property)
• Any other debts you have
• Whether you can liquidate any assets to pay the debt

The CRA expects you to contribute everything reasonably available after basic living expenses. They will not typically accept arrangements where you continue saving or investing while not paying your tax debt.

Interest Continues During Arrangements

Taxpayer Relief Provisions

The CRA's Taxpayer Relief program (formerly Fairness Provisions) allows the CRA to cancel or waive penalties and interest in certain circumstances. It does not reduce the underlying tax debt — only the penalties and interest imposed on top of it.

Grounds for Taxpayer Relief

The CRA may grant relief for:

Extraordinary Circumstances

• Natural or human-made disasters (floods, fires)
• Civil disturbances
• Serious illness or accident affecting you or an immediate family member
• Mental or physical incapacity preventing timely compliance
• Death of a family member

Actions of the CRA

• Processing delays by the CRA that caused interest to accumulate
• Incorrect information given to you by the CRA
• CRA errors in processing your return

Financial Hardship

• Paying the penalty and interest would cause you financial hardship
• Collection of the penalty and interest would compromise your ability to meet basic living expenses

How to Apply for Taxpayer Relief

1. Complete Form RC4288 (Request for Taxpayer Relief — Cancel or Waive Penalties or Interest)
2. Attach supporting documentation (medical records, disaster notices, CRA correspondence showing errors)
3. Submit to your Tax Services Office
4. The CRA typically takes several months to process these requests

10-Year Time Limit on Taxpayer Relief

Taxpayer relief requests are subject to a 10-year rolling time limit — you can only request relief for penalties and interest incurred within the 10 calendar years before the year you submit your request. Plan your application timing accordingly.

If the CRA Has Already Started Collection

If the CRA has already issued a Requirement to Pay against your bank or employer, acting immediately is critical:

• Call CRA Collections immediately and propose a payment arrangement
• If you cannot make reasonable arrangements, consult a Licensed Insolvency Trustee about a consumer proposal or bankruptcy — the stay of proceedings will stop CRA collection actions immediately

Working with Tax Professionals

Complex CRA situations — large amounts owing, multiple years of arrears, business tax debt, director liability — often benefit from professional help. A CPA or tax lawyer can negotiate with the CRA on your behalf and identify options you might not know about. For situations where formal insolvency is appropriate, a Licensed Insolvency Trustee is the right professional.