CRA Garnishment Limits
A Canada Revenue Agency wage garnishment can be very difficult to live with. The CRA can garnish up to 50% of your earnings. Other income, such as income generated from contract work, can be garnished up to 100%! There are CRA garnishment limits that you must know when facing down a potential garnishment.
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How Much Is the CRA Garnishment Limit?
If you do not pay your tax bill, and do not make appropriate payment arrangements with the Canada Revenue Agency (CRA), the agency can garnish your wages. This means it can direct your employer (or any other third party that owes you money) to direct the income or money owed to you directly to the CRA instead. This means that instead of keeping the money you earned, it will go to the CRA to pay your tax bill.
But how much of your money can the CRA garnish? This depends on the type of income that you earn. If you earn income and have taxes deducted at the source (such as a salary from your job), the CRA can garnish 50% of your salary.
However, if you earn subcontractor income, the agency can garnish 100% of this money! The same is true if you earn freelance income. The CRA can require that your clients send 100% of the money invoiced directly to the agency.
What CRA Garnishment Limits Can Mean
Obviously, CRA garnishment limits can be seriously painful, whether the agency is demanding 50% or your income or 100% of it. It is incredibly difficult to pay bills, buy groceries, and afford your monthly living expenses when a large portion of your income is being directed to the CRA.
Unfortunately, once the CRA sends a requirement to pay notice to an employer or a client, they have no choice but to comply. If they do not send the requested money to the CRA, they become liable for your tax debt and the CRA can take collection actions against them.
Of course, a CRA garnishment doesn’t just affect your pocket book. It also hurts your reputation. Once your employer knows that you are having tax problems, they could likely lose respect for you as an employee. If your job requires you to be responsible or manage business financing, a CRA garnishment could hurt your career. The same is true if your self-employment clients are ordered to send the CRA your earnings. This can make you appear irresponsible or unprofessional in their eyes, which can hurt future business.
As a result, a CRA garnishment limits your ability to earn future income in addition to hurting your current financial situation. Therefore, you’ll want to put a stop to garnishment as soon as you can.
How to Put an End to a CRA Garnishment
The CRA can be very difficult to communicate and negotiate with. It knows how powerful its collection methods are and, therefore, it will never accept less than is owed to it. The CRA will also be very demanding if you try to arrange a payment plan. It will consider the debt owed to it the most important out of all of your expenses, which can cause serious financial stress.
Of course, if you do not resolve your tax situation, you could be faced with CRA garnishment limits and your money being directed to the CRA. The reality is that removing a garnishment is quite difficult. The good news is that we have a long history of successfully stopping CRA garnishment processes, arranging reasonable tax payment plans, and resolving tax issues. Our team of ex-CRA, legal, and accounting professionals know tax law and how to negotiate with the CRA.
Trust our team to communicate with the CRA on your behalf and resolve your tax situation. Contact us today to find out more.
Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:
- 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
- 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
- 3| Offer a complete solution to your tax problems, including ex-CRA professionals and tax lawyers from Farber Tax Law.
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