If your business owes the CRA and cannot pay the balance in full, you have more options than most owners realise, and the worst of them is doing nothing. This page covers how CRA payment arrangements work, what they cost, what happens if you ignore the debt, and when funding the balance outright is the better move.
Still carrying a CEBA balance too? The final repayment date is 31 December 2026. See your CEBA repayment options.
What a CRA payment arrangement is
A payment arrangement is an agreement to clear a tax balance over time rather than in one payment. You propose a schedule, the CRA assesses whether it is realistic, and if they accept it you pay in instalments.
Two things are worth understanding before you pick up the phone:
- Interest does not stop. It continues to compound daily on the outstanding balance at the CRA’s prescribed rate, which is reset every quarter. A payment arrangement buys you time, not forgiveness.
- The CRA expects to see your numbers. They will generally want to understand income, expenses and assets before agreeing a schedule, and they may expect you to use available credit first.
You can check the current prescribed interest rate on the CRA’s prescribed interest rates page, which is updated quarterly.
What happens if you do nothing
Tax debt is not like a supplier invoice you can quietly let slide. The CRA has collection powers that most creditors do not, and it can use them without going to court. Those powers include garnishing your receivables by instructing your customers to pay the CRA directly, freezing bank accounts, and registering liens against business assets.
For an operating business, a requirement to pay served on your customers is usually the most damaging. It interrupts cash flow at exactly the wrong moment and it tells your clients you are in difficulty. Arranging something before it reaches that stage is almost always cheaper than dealing with the consequences afterwards.
When a payment arrangement is the right answer
A payment arrangement usually makes sense when the balance is modest relative to your monthly revenue, your trading is stable, and you can commit to the instalments without starving the business of working capital. If you can clear the balance in a few months without affecting payroll or stock, this is the cheapest route and you should take it.
When funding the balance is the better answer
There are three situations where borrowing to clear a CRA balance tends to work out better than a long arrangement:
- The arrangement would squeeze your operations. If the instalments mean you cannot buy stock or make payroll, you are solving a tax problem by creating a trading problem.
- Collection action has already started, or is close. Once receivables are at risk, speed matters more than the cost of capital.
- You need the CRA balance gone to borrow elsewhere. Outstanding tax debt affects how other lenders view you, so clearing it can unlock better terms later.
Revenue-based funding suits this situation because it moves quickly and repayment flexes with your sales. You take a lump sum now, clear the CRA balance, and repay an agreed percentage of your ongoing revenue. Quiet months cost you less than busy ones, which matters if the tax bill arrived because trading was uneven in the first place.
Which route fits your situation
| Your position | Usually the better route |
|---|---|
| Small balance, stable revenue, clearable in a few months | CRA payment arrangement |
| Instalments would stop you trading properly | Fund the balance, keep working capital intact |
| Collection action started or threatened | Fund the balance now, speed matters most |
| Cash tied up in unpaid invoices | Invoice factoring against receivables |
| Tax debt is one of several you cannot service | Licensed Insolvency Trustee before any borrowing |
A word on getting this wrong
Borrowing to pay tax is sensible when the business is fundamentally sound and the bill is a timing problem. It is not sensible when the tax debt is a symptom of a business that is not covering its costs. In that case new funding adds a second obligation on top of the first. If you are not sure which describes you, talk to your accountant or a Licensed Insolvency Trustee before taking on any borrowing. We would rather tell you not to borrow than watch it make things worse.
How Bizfund can help
We fund Canadian businesses against their trading revenue rather than their balance sheet, which matters when a tax balance is already on the books:
- Decisions and funding typically within 24 to 48 hours.
- Approval based on how your business trades, not only on your credit profile.
- Repayment that moves with your sales, so a slow month costs you less.
Start an application or speak to us and we will tell you plainly whether funding is the right tool for your position.
Frequently asked questions
Can I set up a payment plan with the CRA for business taxes?
Yes. You propose a repayment schedule and the CRA decides whether it is acceptable, usually after reviewing your financial position. Interest continues to accrue on the balance throughout.
Does the CRA charge interest on a payment arrangement?
Yes. Interest compounds daily on the outstanding balance at the CRA’s prescribed rate, which is set each quarter. An arrangement spreads the payments, it does not reduce what you owe.
What can the CRA do if I do not pay?
The CRA can instruct your customers to pay it directly instead of you, freeze bank accounts and register liens against business assets, without first obtaining a court order.
Can I get a business loan to pay CRA tax debt?
Yes, and it is common. Revenue-based funding is often used because it is quick and does not require the clean credit profile a bank would expect from a business that already owes tax.
Is it better to arrange a payment plan or borrow to clear the balance?
It depends on the size of the balance against your revenue and how close collection action is. A small balance on stable trading suits an arrangement. A balance that would stop you operating, or one already attracting collection action, usually suits funding.
Last reviewed October 2026. This page explains general funding options and is not tax, legal or insolvency advice. Confirm your own position with the CRA or your accountant.
