Last Updated: November 1, 2026
Quick Summary
A CRA payment plan is a payment arrangement that lets you pay an overdue personal income tax balance in smaller amounts over time. You can request one online through My Account, by phone, or with a collections agent, ideally before collection action starts. Interest keeps accruing, so the balance including interest must still be paid in full.
- Request a payment arrangement before the CRA starts collection action, since you will have fewer options later.
- Gather your notice of assessment, income, essential expenses, and bank details before you call the CRA.
- Propose a monthly amount you can sustain with a small buffer, because a defaulted plan can restart collections.
- Interest continues to accrue, so a shorter schedule costs less overall than a longer one.
- If you miss a payment or your circumstances change, contact the CRA promptly to revise the arrangement.
Table of Contents
- What a CRA Payment Arrangement Covers
- Who Can Request a Payment Arrangement and When
- Step 1: Gather Your Figures Before You Call
- Step 2: Set Up the Arrangement Online or by Phone
- How CRA Interest on Unpaid Taxes Affects Your Total
- What Happens If You Miss a Payment or Your Circumstances Change
- What to Do If You Cannot Pay Taxes Owed to CRA
- Requesting Relief from Penalties and Interest
- Frequently Asked Questions
Owing the CRA money is stressful, but a CRA payment plan can make it manageable. Lira Tax & Accounting works with Canadian taxpayers who need a realistic plan to clear overdue personal income tax, and this guide walks through how the process works. Interest keeps accruing on unpaid balances, so acting early matters. The CRA lets you arrange to pay your debt over time in several smaller payments, but the balance, including interest, still has to be paid in full.
What a CRA Payment Arrangement Covers
A CRA payment arrangement is an agreement to pay an overdue balance in smaller amounts over a set period. The CRA describes it as a way to spread out payments until the entire debt, including interest, is paid.
Interest keeps building during the arrangement. The CRA's prescribed rate for the third calendar quarter of 2026 is 7% on overdue taxes, according to the Canada Revenue Agency's prescribed interest rates for Q3 2026.
An arrangement can cover:
- Personal income tax balances
- Balances owing from a notice of assessment
- Amounts tied to certain CRA benefit debts
Refunds and government payments may still be applied to your balance. The CRA says it can automatically apply refunds and eligible credits or benefit payments to an outstanding debt, as described in the CRA's guidance on automatic application of credits and refunds.
Who Can Request a Payment Arrangement and When
Most individuals with an outstanding personal income tax balance can ask for a payment arrangement. You should request one before the CRA moves to collection action.
The CRA's Manage balance service in My Account is available to people with personal income tax debt. The CRA reported $1.1 billion in payments in full or arrangements attributed to Manage balance as of May 15, 2026, per the CRA's update on options for tax debt.
Ask early. Waiting until a collections agent calls leaves you with fewer options.
Step 1: Gather Your Figures Before You Call
Before you contact the CRA, collect the numbers you will need. A clear picture of your finances helps you propose a payment you can keep up with, and it is the difference between an arrangement that survives and one that collapses after two months.
Prepare these items:
- Your most recent notice of assessment and the total balance owing (principal plus interest to date)
- Your monthly take-home income from all sources
- Essential monthly expenses such as rent or mortgage, food, utilities, transportation, and insurance
- Bank account details (branch, institution, and account numbers) for pre-authorized debit
- Any other debts and their minimum monthly payments
- A list of assets you could liquidate if needed (savings, RRSPs, non-registered investments)
A worked affordability example
A simple affordability check turns your budget into a proposed instalment. The table below is illustrative only, your own figures will differ, and the CRA assesses arrangements case by case.
| Item | Amount (CAD) |
|---|---|
| Monthly take-home income | $3,200 |
| Essential monthly expenses (rent, food, utilities, transport, insurance) | $2,450 |
| Money left for tax payments | $750 |
| Proposed monthly instalment (leaving a small buffer) | $600 |
Proposing an amount below your full surplus leaves room for an unexpected expense and makes the plan more likely to hold. Offering too much can make the plan fail; offering too little can slow the process or prompt the agent to ask for more documentation.
What a collections agent will ask, and a sample script
The CRA's collections agents typically ask about what you owe, what you earn, what you spend, what you own, and what you can realistically pay each month. You do not need to memorize answers, but having them ready shortens the call.
A sample opening you can adapt:
"I have an overdue personal income tax balance of [amount] on my [year] notice of assessment. I want to set up a payment arrangement. My monthly take-home income is [amount], my essential expenses are [amount], and I can commit to [amount] per month starting [date]. I can provide bank statements and my notice of assessment if that helps."
Be ready to explain any large or unusual expenses, and be honest about your assets. The agent can see income information on file, and inconsistencies slow the process.
If you would rather have a professional prepare the figures and handle the call, Lira Tax & Accounting can help you assemble the documentation and submit a realistic proposal.
Step 2: Set Up the Arrangement Online or by Phone
You have three main routes: online through My Account, by phone, or through a collections agent.
Online: Sign in to My Account, select "Proceed to pay," then choose "Schedule a series of payments." Complete and confirm the pre-authorized debit agreement. The CRA's steps are described in the CRA's guide to arranging a payment plan.
By phone: Call the CRA's automated payment arrangement line for personal income tax debt. Check the CRA's website for the current number.
With a collections agent: If the CRA has already contacted you about a balance, a collections agent can negotiate with you directly.
If you would rather have a professional handle the arrangement, Lira Tax & Accounting can help you prepare and submit the details. Browse our accounting and tax services in Toronto, Guelph, Calgary, and across Canada.
How CRA Interest on Unpaid Taxes Affects Your Total
Interest adds to what you owe every quarter until the balance is cleared. A longer arrangement means more interest, so shorter plans cost less overall.
Compare two scenarios on a $5,000 balance at 7% annual interest:
- Paying $500 per month for 10 months costs less in total interest than paying $250 per month for 20 months.
- Spreading payments further out keeps the monthly amount lower but raises the total you repay.
Choose the shortest schedule you can afford.
What Happens If You Miss a Payment or Your Circumstances Change
A payment arrangement is not a guarantee that collections stop. If a review or audit notice has arrived, see what to prepare and how to respond. If you miss a payment, the CRA can treat the arrangement as broken and resume collection action, which may include garnishing income or bank accounts, or applying refunds and credits to the balance. The practical lesson is to call before the due date, not after.
If you miss a payment
Contact the CRA as soon as you realize a payment will be late. Explain what happened and ask whether the arrangement can be reinstated or revised. In many cases a single missed payment can be resolved with a phone call; repeated misses are harder to recover from. Keep a record of the date, the agent's name, and what was agreed.
If your circumstances change
If your income drops, your expenses rise, or you receive a lump sum, you can ask the CRA to change the arrangement. Gather updated figures, new income, revised expenses, and a proposed instalment, and contact the CRA through My Account or the arrangements line. Propose a new amount you can sustain rather than simply stopping payments. If you receive a lump sum, consider whether paying down the balance faster shortens the schedule and reduces interest.
Keep personal income tax debt separate from other CRA debts
A common source of confusion is treating all CRA balances the same. An arrangement for overdue personal income tax is not automatically the same as an arrangement for business tax, payroll deductions, or benefit overpayments such as the Canada Child Benefit or GST/HST credit. Those debts can have different rules, different collection timelines, and different consequences, payroll deductions in particular are treated seriously by the CRA.
If you need help communicating
The CRA offers accessibility and language support, and you can authorize a representative to discuss your account on your behalf. If you are uncomfortable negotiating directly, an authorized representative, an accountant, a family member, or a tax professional, can speak to the CRA for you once the proper authorization is in place.
What to Do If You Cannot Pay Taxes Owed to CRA
If you cannot afford any payment, do not ignore the balance. Ignoring it increases interest and penalties.
Start by confirming all your returns are filed. Learn how to file back taxes and avoid further CRA penalties before arranging payment. Unfiled returns can trigger additional penalties. Our unfiled tax service page covers how to catch up.
If you have a professional tax review underway, our [CRA Audit Help | liratax.ca/service/cra-audit-help/] service page explains what to prepare.
Requesting Relief from Penalties and Interest
You may be able to ask the CRA to cancel or waive some penalties and interest.
Relief is usually considered when a delay was caused by circumstances beyond your control, such as serious illness or a natural disaster. Prepare a taxpayer relief request with the supporting evidence the CRA looks for.
Frequently Asked Questions
Can I set up a CRA payment arrangement online? Yes.
Does a payment arrangement stop interest? No.
What if I miss a payment? A missed payment can end the arrangement and lead to collection action.
Lira Tax & Accounting helps individuals and businesses across Canada work through tax debt.
Add liratax.ca as a preferred source on Google →Frequently Asked Questions
Will CRA allow a payment plan for overdue personal taxes?
Yes. The Canada Revenue Agency lets taxpayers arrange to pay a debt over time through a series of smaller payments. The CRA says you should calculate an amount you can afford, and the arrangement must cover the full balance, including interest, until it is paid. You can request one online through CRA My Account, by phone, or by speaking with a collections agent. People with personal income tax debt may be able to use the Manage balance service in My Account. Eligibility depends on your situation, so check the current CRA guidance before you apply.
Does interest continue to accrue while I am on a CRA payment plan?
Yes. A payment arrangement does not stop interest. The CRA describes an arrangement as smaller payments over time until the entire debt, including interest, is paid. The prescribed interest rate on overdue taxes is set quarterly by the CRA and can change. Paying more than the minimum reduces the balance on which future interest is calculated, so it is worth paying down principal early when you can afford to.
What information should I have ready before contacting the CRA about a payment plan?
Have your Social Insurance Number, the tax years in question, and your notice of assessment or balance details on hand. Prepare a realistic budget showing your monthly income, essential expenses, and what you can afford to pay each month. Note any assets you could use to reduce the balance. Keep your bank details ready if you plan to set up pre-authorized debit payments. Having these figures ready helps the CRA agree on an amount and schedule you can actually meet.
Can I ask the CRA to cancel or waive penalties and interest?
Yes. Taxpayers can request taxpayer relief for penalties and interest if circumstances such as illness, a natural disaster, or a CRA error contributed to the balance. Submit a written request with supporting documents explaining why the amount should be reduced or cancelled. The CRA reviews each request individually, so approval is not guaranteed. Relief requests do not automatically pause collection, so continue with a payment arrangement while your request is under review.
