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CRA Payment Arrangement Request (Canada)
When a Canadian tax debt cannot be paid at once, the difference between garnished wages and a manageable schedule is usually one document: a payment proposal with the disclosure the Canada Revenue Agency actually decides on. Our Canadian template produces that letter — the debt, a realistic monthly offer with an automatic term estimate, the income-and-expense worksheet collections officers test offers against, a structured response to the legal warning or requirement to pay, and the relief request that attacks the interest while the arrangement retires the principal.
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Payment Arrangement Request
Proposal To Retire A Tax Debt By Monthly Instalments · June 8, 2026
Marcus T. Oduya
24 Hartfield Court, Brampton ON L6Y 4S8
+1 (905) 555-0162
marcus.oduya@email.ca
June 8, 2026
Canada Revenue Agency — Collections (Attn: Officer D. Lapointe, ref. C-7741)
Canada Revenue Agency — Collections
1 Front Street West
Toronto ON M5J 2X6
1 Front Street West
Toronto ON M5J 2X6
PAYMENT ARRANGEMENT REQUEST
Individual income tax (T1) · 2023 and 2024
Dear Sir or Madam,
I am writing about my outstanding individual income tax (t1) balance of approximately 18,400.00 CAD for 2023 and 2024. I cannot retire it in a single payment, and I am asking the CRA to accept the payment arrangement proposed below. I understand an arrangement is granted under the CRA’s collections policy rather than as a statutory right, and this letter therefore provides what that policy asks for: a realistic schedule, full disclosure of my ability to pay, and my commitment to keep all current filings and payments up to date while the arrangement runs.
I am writing about my outstanding individual income tax (t1) balance of approximately 18,400.00 CAD for 2023 and 2024. I cannot retire it in a single payment, and I am asking the CRA to accept the payment arrangement proposed below. I understand an arrangement is granted under the CRA’s collections policy rather than as a statutory right, and this letter therefore provides what that policy asks for: a realistic schedule, full disclosure of my ability to pay, and my commitment to keep all current filings and payments up to date while the arrangement runs.
1.
TAXPAYER DETAILS
Full name: Marcus T. Oduya
SIN / Business Number: 456-789-123
Address: 24 Hartfield Court, Brampton ON L6Y 4S8
Telephone: +1 (905) 555-0162
Email: marcus.oduya@email.ca
Collections contact on file: Officer D. Lapointe, ref. C-7741
SIN / Business Number: 456-789-123
Address: 24 Hartfield Court, Brampton ON L6Y 4S8
Telephone: +1 (905) 555-0162
Email: marcus.oduya@email.ca
Collections contact on file: Officer D. Lapointe, ref. C-7741
2.
THE DEBT
Account: Individual income tax (T1)
Years / periods: 2023 and 2024
Balance owing (approximate): 18,400.00 CAD
I understand that for individual income tax the law restricts legal collection while a debt is under objection or within 90 days of assessment, and that those restrictions do not pause interest or set-off.
Years / periods: 2023 and 2024
Balance owing (approximate): 18,400.00 CAD
I understand that for individual income tax the law restricts legal collection while a debt is under objection or within 90 days of assessment, and that those restrictions do not pause interest or set-off.
3.
PAYMENT PROPOSAL
Good-faith payment on acceptance: 1,500.00 CAD
Monthly payment: 800.00 CAD
First payment: July 15, 2026, and on the same day of each month thereafter
Estimated term: approximately 22 monthly payments before interest — interest at the prescribed rate continues to accrue and the schedule will be adjusted or the final payment topped up so the account closes in full.
This is the highest sustainable amount my disclosed income and essential expenses support. If my circumstances improve I will increase the payments or retire the balance early; if they worsen I will contact the CRA before any payment is missed rather than let the arrangement default.
Monthly payment: 800.00 CAD
First payment: July 15, 2026, and on the same day of each month thereafter
Estimated term: approximately 22 monthly payments before interest — interest at the prescribed rate continues to accrue and the schedule will be adjusted or the final payment topped up so the account closes in full.
This is the highest sustainable amount my disclosed income and essential expenses support. If my circumstances improve I will increase the payments or retire the balance early; if they worsen I will contact the CRA before any payment is missed rather than let the arrangement default.
4.
MY SITUATION IN BRIEF
A contract position I had held for six years ended in late 2023, and for eleven months my only income was part-time work. Tax on my severance and on RRSP withdrawals I used to cover rent went unpaid. I have been back in full-time work since October 2025, my 2025 return is filed, and I want a schedule that clears this balance completely.
5.
FINANCIAL DISCLOSURE — INCOME AND EXPENSES
In the form of the CRA’s income and expense worksheet, my monthly position is disclosed in full:
Monthly income (net):
Employment income (net, monthly): 4,350.00 CAD
Weekend catering work (net, monthly): 600.00 CAD
Total monthly income: 4,950.00 CAD
Monthly essential expenses:
Rent: 1,850.00 CAD
Groceries and household: 620.00 CAD
Vehicle, fuel and insurance: 510.00 CAD
Utilities and phone: 285.00 CAD
Child support: 550.00 CAD
Medical and dental: 175.00 CAD
Total monthly expenses: 3,990.00 CAD
Net monthly capacity: 960.00 CAD — the proposed payment is set against this capacity, which is why it is sustainable.
Assets and liabilities in summary: No real property. One 2017 vehicle (needed for work, approximate value 9,000 dollars, no loan). Chequing and savings under 2,200 dollars combined. Consumer credit balance of 4,100 dollars being paid down at 150 dollars per month.
Monthly income (net):
Employment income (net, monthly): 4,350.00 CAD
Weekend catering work (net, monthly): 600.00 CAD
Total monthly income: 4,950.00 CAD
Monthly essential expenses:
Rent: 1,850.00 CAD
Groceries and household: 620.00 CAD
Vehicle, fuel and insurance: 510.00 CAD
Utilities and phone: 285.00 CAD
Child support: 550.00 CAD
Medical and dental: 175.00 CAD
Total monthly expenses: 3,990.00 CAD
Net monthly capacity: 960.00 CAD — the proposed payment is set against this capacity, which is why it is sustainable.
Assets and liabilities in summary: No real property. One 2017 vehicle (needed for work, approximate value 9,000 dollars, no loan). Chequing and savings under 2,200 dollars combined. Consumer credit balance of 4,100 dollars being paid down at 150 dollars per month.
6.
WHY INSTALMENTS — AND THE GOOD FAITH BEHIND THEM
Why a single payment is not possible: The balance equals more than three months of my entire net income. Paying it at once is not possible without defaulting on rent and child support; paying it monthly from disclosed capacity is.
Steps already taken: I have cancelled discretionary spending, taken weekend catering shifts, set aside the 1,500 dollar good-faith payment enclosed with this proposal, and increased my employer withholding so the 2026 year stays fully paid as I go.
A good-faith payment of 1,500.00 CAD accompanies this proposal so the balance starts falling immediately.
Until the events described here my record was clean: returns filed and balances paid on time. This debt is the exception, not the pattern.
Steps already taken: I have cancelled discretionary spending, taken weekend catering shifts, set aside the 1,500 dollar good-faith payment enclosed with this proposal, and increased my employer withholding so the 2026 year stays fully paid as I go.
A good-faith payment of 1,500.00 CAD accompanies this proposal so the balance starts falling immediately.
Until the events described here my record was clean: returns filed and balances paid on time. This debt is the exception, not the pattern.
7.
RESPONSE TO COLLECTION ACTION
I acknowledge the legal warning on this account. I understand the CRA’s policy is to give at least one legal warning before legal action and that, once given, action — a requirement to pay served on my employer or bank, certification of the debt in the Federal Court enabling a lien, or seizure — can follow without further notice. This proposal is made so that none of that is necessary: an account paying as agreed does not need enforcement.
Enforcement particulars: The legal warning letter is dated May 20, 2026 and refers to a possible requirement to pay served on my employer.
I ask the assigned officer to note the account with this arrangement and hold legal action while the payments are made as agreed. I understand that set-off of refunds and credits continues regardless and that any missed payment can end the arrangement — which is why the schedule proposed is one I can actually keep.
Enforcement particulars: The legal warning letter is dated May 20, 2026 and refers to a possible requirement to pay served on my employer.
I ask the assigned officer to note the account with this arrangement and hold legal action while the payments are made as agreed. I understand that set-off of refunds and credits continues regardless and that any missed payment can end the arrangement — which is why the schedule proposed is one I can actually keep.
8.
INTEREST, ALLOCATION AND RELIEF
I acknowledge that arrears interest continues during the arrangement at the prescribed rate plus 4% — currently 7% per annum, compounded daily (April–June 2026 quarter) — and that payments are applied to the account as the CRA allocates them. The schedule above is sized so the balance falls faster than interest accrues.
In parallel, I am applying under the taxpayer relief provisions (Income Tax Act, s.220(3.1); Form RC4288 or letter) for cancellation of penalties and interest that arose from circumstances beyond my control. Relief on the interest, combined with this arrangement on the principal, retires the debt soonest — and I ask that the collections file note the pending relief request.
On confirmation, I will set up the schedule as a pre-authorized debit in CRA My Account (first payment at least five business days after the agreement is created) so every payment is automatic and traceable.
In parallel, I am applying under the taxpayer relief provisions (Income Tax Act, s.220(3.1); Form RC4288 or letter) for cancellation of penalties and interest that arose from circumstances beyond my control. Relief on the interest, combined with this arrangement on the principal, retires the debt soonest — and I ask that the collections file note the pending relief request.
On confirmation, I will set up the schedule as a pre-authorized debit in CRA My Account (first payment at least five business days after the agreement is created) so every payment is automatic and traceable.
9.
COMMITMENT AND CONTACT
While this arrangement runs I will keep every current obligation up to date — returns filed on time and current balances paid as they fall due — since I understand the CRA expects ongoing compliance alongside any arrangement. If my circumstances change I will contact the CRA before a payment is affected. Please confirm acceptance of this arrangement in writing, or contact me to discuss an adjusted schedule — I would rather agree a workable arrangement than see enforcement costs added to a debt I am committed to paying.
YOURS TRULY,
Marcus T. Oduya
Taxpayer
Date: ____________________
TAXPAYER
Marcus T. Oduya
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is a CRA Payment Arrangement?
A payment arrangement is an agreement with the <strong>Canada Revenue Agency</strong> to retire a tax debt by instalments over time. There is no statutory right to one — arrangements are granted under the CRA's collections policy (Information Circular IC98-1R8) — which means the file is decided on persuasion and disclosure: what you owe, what you can genuinely pay each month, what the necessities cost, and whether your offer is the most the numbers support. An arrangement can be set up as pre-authorized debits in CRA My Account, through the automated TeleArrangement phone service, or with the collections officer on your file; this letter creates the written record all three run on.
Why the letter matters is what happens without one. CRA policy is to give at least one <strong>legal warning</strong> before legal action — and once it is given, a requirement to pay can land on your employer or bank, and the debt can be certified in the Federal Court (enabling a lien on property) <strong>without further notice</strong>. Set-off of your refunds and credits happens regardless. An account that is paying as agreed, with disclosure on file, is an account collections does not escalate; a kept arrangement is the practical protection Canadian taxpayers actually get.
Two honest realities are built into the template. Interest keeps compounding daily during an arrangement — 7% per annum for the April–June 2026 quarter — so the smart structure pairs the arrangement on the principal with a <strong>taxpayer relief request</strong> attacking the interest where illness, job loss or CRA delay caused the debt. And a payment or written acknowledgment restarts the ten-year collections limitation period — a trade-off the letter discloses so you decide with eyes open, and one almost everyone with wages or accounts at risk accepts.
What's Covered in This Template
The letter mirrors the CRA collections worksheet — debt, offer, capacity, conduct — and answers the officer's questions before they are asked.
Debt-Type Framing
Individual income tax, corporate, GST/HST or payroll source deductions — the letter adapts its framing to the collection rules for each, including the trust treatment of source deductions.
Offer With Term Estimate
Your monthly amount and start date, an optional good-faith payment, and an automatic estimate of the number of payments — with the interest caveat stated.
Income & Expense Worksheet
Source-by-source monthly income and item-by-item essential expenses, totalled automatically, with the offer anchored to the computed net capacity.
Assets & Liabilities Summary
Officers check whether an asset could pay the debt — the letter addresses it before they ask, in the RC376 worksheet logic.
Hardship & Good Faith
Why a lump sum is impossible measured against income, the steps already taken — extra shifts, cancelled spending, increased withholding — and your compliance record positioned.
Legal Warning Response
Acknowledges a legal warning in officer-ready terms, or — where a requirement to pay is already active — requests it be lifted or reduced once payments flow.
Set-Off & Default Honesty
States plainly that refund set-off continues and that a missed payment can end the arrangement — credibility that distinguishes the letter from a plea.
Relief Stacking
Notes a parallel taxpayer relief request (s.220(3.1) / RC4288) on the file, so the interest is attacked while the principal is retired.
Payment Mechanics
Commits to pre-authorized debit in CRA My Account (first payment five business days out), TeleArrangement, or post-dated payments — whichever you choose.
How to Create a Payment Arrangement Request
Five steps from collections letter to a proposal a Canadian collections officer can fund.
- 1
Pull the Balance
From CRA My Account or the latest collections letter: the current balance, the years or periods, and the officer or reference if one is named. Interest accrues daily, so use today's figure.
- 2
Set a Keepable Offer
Offer the highest amount you can sustain every month — a broken arrangement is worse than a slower one. The template estimates the term automatically.
- 3
Disclose the Capacity (Expert)
List monthly income by source and essential expenses item by item. The letter totals them and anchors your offer to the net capacity — the test officers actually apply.
- 4
Answer the Enforcement (Expert)
Acknowledge the legal warning, or ask for an active garnishment to be lifted once payments flow — and request the account be noted with the arrangement.
- 5
Send It and Set Up the Payments
Mail the letter to the collections office on your CRA correspondence, then set up the schedule — pre-authorized debit in My Account or TeleArrangement — so the first payment lands exactly as proposed.
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Legal Considerations
CRA collections runs on policy backed by hard statutory powers — the letter works because it engages both.
This template provides general information for Canadian taxpayers and is not tax, legal or insolvency advice. If the debt is beyond any realistic schedule, a Licensed Insolvency Trustee can advise on consumer proposals and bankruptcy — federally regulated options that deal with CRA debt differently. For director liability or payroll trust amounts, get advice from a Canadian tax lawyer promptly.
Reviewed for Canadian tax law
No Statutory Right — Policy Decides
Nothing in Canadian tax law entitles a taxpayer to instalments: arrangements are granted under the CRA's collections policies (IC98-1R8) when the taxpayer demonstrates inability to pay in full and ability to pay over time. That is why the letter leads with disclosure — the income and expense worksheet logic, assets and liabilities — and why the offer is anchored to computed capacity. An officer can defend approving a documented proposal; a bare promise gives them nothing to approve.
The Legal Warning and What Follows It
CRA policy is to make at least one attempt to give a legal warning before starting legal action. After that, no further notice is required before a requirement to pay is served on your employer or bank (garnishment under the Income Tax Act), the debt is certified in the Federal Court — which enables a lien on property — or assets are seized. GST/HST and payroll source-deduction debts are collected more aggressively still: source deductions are treated as held in trust for the Crown, and GST/HST amounts are payable forthwith with no objection hold.
What an Arrangement Does Not Stop
Set-off continues: the CRA may apply your income tax refunds, GST/HST credits and other federal amounts against the debt throughout. Interest continues at the prescribed rate plus 4% — 7% per annum for the April–June 2026 quarter — compounded daily. And a payment or written acknowledgment restarts the ten-year collections limitation period. The template discloses each plainly: an offer that shows a Canadian taxpayer understands the rules reads as credible, and credibility is the currency of a collections file.
Keep Current — the Condition That Decides Renewals
The CRA expects ongoing compliance alongside any arrangement: current-year returns filed on time and current balances paid as they fall due, while the old debt is retired on schedule. A missed or returned payment can cancel the arrangement, after which legal action may resume without further warning. The template commits to contact before any payment is missed — the single habit that keeps arrangements alive when circumstances wobble.
Pair It — Relief on the Interest, Dispute on the Merits
An arrangement retires the principal; it does nothing about the 7% compounding against you. Where illness, job loss, disaster or CRA delay caused the debt, our CRA taxpayer relief request asks for cancellation of penalties and interest under s.220(3.1) of the Income Tax Act — and this letter notes the pending request on the collections file. If the underlying assessment is wrong, dispute it through our CRA notice of objection (income tax) or GST/HST notice of objection; and where the debt traces to shareholder loans, our Canadian shareholder loan agreement template addresses the s.15(2) income-inclusion trap at its source. If unpaid customers are what emptied the account, our Canadian demand letter template is the fastest route to the receivables that fund the schedule.
Frequently Asked Questions
Turn a Collections File Into a Schedule You Can Keep
Create your CRA payment arrangement request in minutes: a capacity-anchored offer, the full income-and-expense disclosure, a structured answer to the legal warning and the relief pairing that shrinks the interest — in formal Canadian letter format. Download the PDF free, or unlock Expert for the disclosure, enforcement and relief sections.
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