Canada Revenue Agency (“CRA”, or formerly, Revenue Canada) is a very powerful creditor who can access avenues of debt collection much more quickly than other types of creditors. CRA has advised that they are diligent in registering secured interests against seriously delinquent accounts.
If you are behind in your income tax return or GST filings, or payment obligations, CRA has the legal power and may resort to collection actions including registering a lien on your residence, or other real property. This includes the ability of CRA to register a charge against property that is held jointly. CRA’s definition of property is quite broad – property may consist of your residence or other real estate, as well as other assets you may have.
Once a lien is registered by CRA it will effectively act as a mortgage. Foreclosure proceedings will not necessarily start if you continue to leave the debt unpaid, but if you want to transfer or sell the property, CRA will need to get paid first.
A search of the Personal Property Security Registry (British Columbia) or Land Titles will reveal if CRA has registered a lien against your property. Even if there is no entry stating that CRA has registered, you may want to consider filing for bankruptcy or filing a Consumer Proposal to resolve the matter and to prevent CRA from taking further steps.
Although many people do not know this, filing a personal bankruptcy or a Consumer Proposal can halt escalating collection actions – successfully preventing CRA from registering a lien against your property – and write-off CRA debt.
If you have outstanding amounts owing to CRA (for personal income taxes, business GST, business tax, etc.) or have been postponing filing your tax returns because you believe you will owe, it’s best to take a proactive approach. Waiting for CRA to take steps to collect against you can be incredibly stressful and if a charge is registered against your property it can be difficult to remove it unless you pay the balance off in full.