Can CRA Withhold My Tax Refund or Benefits or Garnish My Wages?

Income Tax Act s. 164(2), 222

Tax Refunds and/or Benefit Credit

The answer to this is yes, Canada Revenue Agency (CRA) can withhold an income tax refund and/or Benefit (e.g. GST/HST) credit, if:

the taxpayer has an income tax liability outstanding for another taxation year
the taxpayer is in debt to a federal, provincial or territorial government
CRA is ordered to do so under a garnishment order under the Family Orders and Agreements Enforcement Assistance Act
the taxpayer has any outstanding GST/HST returns from a sole proprietorship or partnership

For more detail see the CRA web page How payments are applied to offset debt.

What Other Collection Actions Can CRA Use?

Besides withholding your income tax refund or your GST/HST credit, CRA can:

garnish wages or other income
seize and sell your assets
withhold your Canada Pension Plan payments
withhold your Old Age Security payments

It's possible CRA will not take any collection actions if they can see that you're making payments on your debt to them on a regular basis. However, you will continue to be charged interest.

TaxTips.ca Resources

Personal Income Tax Return Due Date

Late Filing Penalties and Interest

Canada Revenue Agency (CRA) Resources

Payment Arrangements, which talks about what you can do if you cannot pay the balance owing

Tax refunds

Call us if you can't pay in full or on time

IC98-1R8 Tax Collections Policies

IC13-2R1 Government Programs Collection Policies

Tax Tips:

Always file your tax return on time, even if you can't afford to pay the tax!

Then, pay what you can, and keep paying till it's paid off!