What to Do When the CRA Freezes Your Bank Account
The CRA can freeze a bank account without a court order. A Licensed Insolvency Trustee can unfreeze it the day they file a consumer proposal or bankruptcy.
Robert Johnson, CPA, CA, CIRP
Licensed Insolvency Trustee
or call 587-701-5681
Updated:
A CRA bank account freeze is a Requirement to Pay, a legal notice the Canada Revenue Agency serves on your bank, ordering it to send your money to the CRA. It doesn’t need a court order, under the Income Tax Act for income tax and the Excise Tax Act for GST/HST. If you don’t act, the bank sends the CRA whatever you owe, or your whole balance if that’s less.
The CRA will usually not stop or withdraw a Requirement to Pay until the account is paid in full, or until you can show the action is causing financial hardship.
There’s three ways to resolve it: agree to a payment arrangement the CRA accepts, show the freeze is causing financial hardship, or file a consumer proposal or bankruptcy, which stops CRA collection the day your trustee files.
Agreeing to a payment arrangement over the phone doesn’t lift the freeze on its own. Your bank only releases the money once the CRA confirms in writing that the notice is withdrawn.
In this guide
Can the CRA freeze your bank account without a court order?
Yes. The CRA (Canada Revenue Agency) can freeze your bank account by issuing a Requirement to Pay under section 224 of the Income Tax Act, a written notice ordering your bank to send the money in your account to the Receiver General. Your bank must comply.
An ordinary creditor cannot do this. For example, a credit card company has to sue you, win a judgment, then get a garnishing order first. But the CRA only needs a Requirement to Pay.
Source: Income Tax Act – Section 224 and Excise Tax Act – Section 317
If you owe $9,000 and there is only $3,000 in your account, the bank sends the $3,000 to the CRA. You’re still $6,000 short. The Requirement to Pay remains active after the first withdrawal, so any new deposits into your account can be seized and sent to the CRA until the balance is paid in full or the CRA withdraws the notice.
Source: Canada Revenue Agency – How to process a garnishment from the CRA
The CRA can serve a Requirement to Pay on a joint bank account, even if the tax debt belongs to only one account holder. As a result, a spouse or business partner may find that shared funds are used to settle another person’s tax debt.
Why would the CRA freeze your bank account?
The CRA does not freeze accounts without warning. It has likely frozen it because of unpaid assessed balances, unfiled returns, a payment arrangement you stopped keeping to, or unresolved benefit repayments like CERB. If you haven’t filed a return, the CRA can assess one for you and collect the owed amount. Businesses can also have their accounts frozen for unremitted GST/HST or unpaid payroll deductions.
The CRA must issue warnings before taking legal action. According to its published process, you should receive at least one verbal legal warning by phone and one written legal warning letter. For debts related to GST/HST remittances and payroll deductions, the notice of assessment or reassessment serves as the written warning.
Source: Canada Revenue Agency – If you don’t pay your debt
It’s normal for people to miss those warnings. The call goes to an old number, the letter to an old address, or you might think it’s a scam. The freeze is the first thing you can’t ignore.
What to do right now if your account is frozen
Call your bank first. Confirm the CRA initiated the freeze and request a copy of the Requirement to Pay. This document tells you which tax the debt is for and how much the CRA is claiming.
Then call CRA collections using the number on the legal warning letter. Ask which tax years the balance covers, whether any returns are unfiled, and what steps you need to take to have the notice withdrawn. Unfiled returns are a common reason a balance is higher than expected.
Ask about a payment arrangement. The CRA will “consider mutually satisfactory payment arrangements, based on your ability to pay.” Expect to provide proof of your income, expenses, assets and liabilities.
If the freeze leaves you unable to cover rent or groceries, say so. The CRA’s collections policy states it will usually not stop or withdraw a Requirement to Pay “until the account is paid in full, or when it can be shown that the action is causing financial hardship.” Make your argument clearly, and use bank statements, bills, and proof of income to back it up.
Source: Canada Revenue Agency – Tax collections policies (IC98-1)
Not sure what to do about a CRA bank freeze?
Get honest debt advice from a Licensed Insolvency Trustee by video, phone or in person.
What not to do when the CRA freezes your account
Don’t wait it out. The freeze does not lift on its own. During its effective period, the notice can seize funds that are deposited in your bank account, and the balance keeps growing because interest compounds daily.
Don’t move the money. Moving funds elsewhere or opening a new account won’t put them out of the CRA’s reach. Your bank reports the interest you earn to the CRA on a T5 slip every year, and under section 231.2 of the Income Tax Act, the CRA can require any bank to disclose your account details.
Source: Income Tax Act – Section 231.2
Don’t assume a phone call will resolve it. Banks must continue to comply with a Requirement to Pay unless they receive written notice of its withdrawal.
How to get the CRA to unfreeze your bank account
There are three ways to unfreeze a CRA bank account.
Making a payment arrangement generally withdraws the Requirement to Pay notice once the CRA accepts the terms, but the bank must receive written confirmation before you can use the account again. Interest continues to accrue until you pay the balance in full.
Source: Canada Revenue Agency – Payment arrangements
If you’re facing financial hardship, the CRA can stop a Requirement to Pay. Present your case directly to the collections officer. Be sure to include proof of your income, expenses, and what you can’t afford, such as bank statements, overdue bills, and a summary of your monthly costs.
Filing a consumer proposal or bankruptcy stops all collection action for all your unsecured creditors, including the CRA. Once a Licensed Insolvency Trustee files with the OSB, an automatic stay of proceedings under the Bankruptcy and Insolvency Act lifts the Requirement to Pay. Wage garnishments, bank freezes, and court orders all stop.
Source: Bankruptcy and Insolvency Act – Section 69.2 (consumer proposal) and Section 69.3 (bankruptcy)
| Option | What it does | Timeline |
|---|---|---|
| Payment arrangement | You agree to pay over time, and the CRA withdraws the notice in writing | Days to weeks, if the CRA accepts your terms |
| Financial hardship | The CRA can stop collection actions if you can show it is causing you financial hardship | No set timeline. The CRA decides case by case. |
| Consumer proposal or bankruptcy | An automatic stay under the BIA stops CRA collection | From the moment the Licensed Insolvency Trustee files with the OSB |
For more on how to deal with CRA debt you can’t pay in full, see CRA tax debt relief.
Frequently asked questions
Can the CRA freeze my bank account without notice?
The CRA usually issues one verbal warning by phone and one written legal warning letter before pursuing legal action. But it doesn’t tell you the date it freezes your bank account. The notice goes directly to your bank, not to you, which often means you only find out when your card gets declined.
How long does a CRA bank account freeze last?
The CRA sets an effective period when it issues the Requirement to Pay. This garnishment is typically valid for 90 days, one year, or until your tax debt is fully paid. Your effective period is on the first page of your Requirement to Pay. The freeze can end earlier if the CRA withdraws the notice in writing or if you file a consumer proposal or bankruptcy, which triggers an automatic stay.
Can the CRA freeze my credit card?
No, the CRA cannot freeze your credit card in the same way it can freeze a bank account. A Requirement to Pay targets money that someone holds for you or owes you, whereas a credit card represents money that you owe to the lender. The CRA can access any credit balance on the card, and your bank may reduce your limit after receiving a notice from the CRA.
Can the CRA freeze a business bank account?
Yes, particularly for unpaid GST/HST or payroll source deductions. The CRA can issue an enhanced Requirement to Pay that takes precedence over secured lenders. If you are a sole proprietor, the CRA can access both your business and personal accounts for the same debt.
Can the CRA take money from a joint bank account?
Yes, the CRA can serve a Requirement to Pay on a joint bank account, even if the tax debt only belongs to one holder. If most of the money belongs to your co-holder, alert the collections officer immediately, not after the funds are withdrawn.
Will the CRA lift the freeze if I can’t afford rent or groceries?
Yes, it can. According to the CRA’s collections policy, it will typically not stop or withdraw a Requirement to Pay until the debt is fully paid or when you can demonstrate that the action is causing financial hardship. You’ll need proof of your income, expenses, assets and liabilities.
Can the CRA garnish my wages and freeze my account at the same time?
Yes, it can do both at the same time. The CRA can serve a single Requirement to Pay that targets your paycheque and your bank account. If your wages are being garnished, here’s how to stop a CRA wage garnishment.
Talk to a trustee to stop the CRA from taking more
The sooner you address a frozen account, the more of your money you can keep.
A consumer proposal or bankruptcy can lift the freeze the same day. Consult a Licensed Insolvency Trustee about the freeze and the tax debt causing it. Your first consultation is free.
Not sure which path is right for you?
Get honest debt advice from a Licensed Insolvency Trustee by video, phone or in person.
Robert Johnson, CPA, CA, CIRP, Licensed Insolvency Trustee
Robert Johnson is a Licensed Insolvency Trustee (LIT) with Moses Advisory Group Inc. He brings over 20 years of experience and has helped thousands of Canadians resolve their debt through consumer proposals, bankruptcy, and debt restructuring. Robert is licensed by the Office of the Superintendent of Bankruptcy and is a member of CAIRP, the Canadian Association of Insolvency and Restructuring Professionals.
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