How to Pay Your Taxes in Payments: CRA Arrangements (2026)

How to pay taxes in payments: the CRA lets you spread a balance over time through a payment arrangement — a series of pre-authorized debits set up in My Account, through the Manage balance service, or by phone. Interest keeps running at 7% (the 2026 rate) until the last dollar is paid, so the arrangement is a bridge, not a discount.

The Canada Revenue Agency does not offer instalment "plans" in the way a retailer does, and it does not negotiate the tax itself downward. What it offers is a payment arrangement: an agreement that you will pay a stated amount on a stated schedule until the whole debt — tax, penalties and the interest that keeps accruing — is cleared. Keep to it and the CRA holds off the enforcement tools it would otherwise use. Break it and those tools come back.

In 2026 there are three ways in. You can schedule a series of pre-authorized debit payments yourself in My Account, which the CRA accepts for personal income tax and most benefit repayments without anyone reviewing your finances. You can use the Manage balance service inside My Account, launched in October 2025, which lets anyone with $1,000 or more of personal income tax or COVID-19 benefit debt make a full or partial payment, schedule a series of payments, or contact a collections officer without picking up the phone. Or you can call — the automated TeleArrangement line for personal income tax, or an agent for anything else, including corporate tax, payroll and GST/HST through My Business Account.

Two things frame everything that follows. First, an arrangement changes when you pay, not how much: interest at the prescribed rate — 7% for the second half of 2026, compounded daily — runs on the unpaid balance for the whole life of the plan. Second, the CRA's stated policy is that an arrangement is for people who cannot pay in full after trying to borrow or rearrange their finances. It is a collections tool, offered because it beats enforcement for both sides, and it is granted on evidence of what you can afford.

Used properly, it is still the best option for most people who owe more than they can clear at once. The alternative — silence — leads to the sequence described in our guide to what happens if you don't pay taxes: warnings, then garnishment, set-off and liens, all without a court order.

The CRA's collections policy is explicit about the order of operations. In its own words, a collections officer will work with you to develop a plan "when you have tried all reasonable ways of getting the necessary funds, either by borrowing or rearranging your financial affairs, and you still cannot pay the balance in full." That sentence shapes the conversation you will have, so it is worth taking seriously before you call.

Practically, it means three things. Pay whatever you can immediately — a partial payment on the day you file reduces the balance that earns 7% interest and demonstrates good faith. Be ready to explain why borrowing is not available or would cost more: a maxed line of credit, a mortgage renewal that failed, a business that cannot take on debt. And have the numbers to hand, because the CRA will ask for "supporting documentation as proof of your income, expenses, assets, and liabilities" to determine what you can afford on a regular basis. Its personal income and expense worksheet is the template.

The other prerequisite is filing. The CRA will not arrange payment on a debt it cannot measure, and a year with an unfiled return is a year with an estimated liability the CRA may assess arbitrarily and without your deductions. File every outstanding return first, even if you cannot pay a cent; the late-filing penalty stops growing the day the return arrives, and the balance you are arranging becomes a real figure rather than a guess. Our tax filing deadline guide covers what "late" means for each kind of filer.

Finally, decide what you are asking for. A self-serve series of pre-authorized debits in My Account is accepted as you enter it, but if it is unrealistic you will simply default on it. An arrangement negotiated with an officer, backed by the worksheet, is more work to set up and far more durable — and it is the only kind available for corporate, payroll and GST/HST debts, where small business accounting support usually pays for itself in the first conversation.

Pre-authorized debit in My Account. The simplest route. Sign in, choose to schedule a series of payments, and set up a pre-authorized debit (PAD) agreement from your bank account — the amount, the frequency and the start date. The CRA requires the agreement to be created at least five business days before the first withdrawal. My Account covers personal income tax, benefit and credit repayments such as CERB and the GST/HST credit, and TFSA amounts. Businesses do the same in My Business Account for corporate tax, payroll deductions, GST/HST and the fuel charge.

Manage balance. Launched in October 2025 and expanded through 2026, this service inside My Account is for anyone with $1,000 or more of personal income tax or COVID-19 benefit debt. From one screen you can make a full or partial payment, schedule a series of payments, see which collections officer is assigned to your file, request a callback, or contact that officer — the CRA's phrase is that it lets you "resolve your debt online, without speaking to a collections officer." By the CRA's own count it produced $1.1 billion in payments and arrangements in its first seven months, which tells you how many people had been avoiding the phone.

TeleArrangement. An automated line, 1-866-256-1147, open 7 a.m. to 10 p.m. Eastern, Monday to Friday, for personal income tax debts only. It walks you through proposing a schedule without an agent. You will need to identify yourself, so have your notice of assessment and last return in front of you.

Speaking to an agent. For anything the automated routes do not cover — a corporate or payroll balance, a debt already with a collections officer, an arrangement that needs to run longer than the self-serve options allow — call the number on your notice. This is where the worksheet matters: the officer's job is to agree a schedule that clears the debt in a reasonable period based on what you can demonstrably afford.

Whichever route you use, the arrangement is only as good as the payments behind it. Set the debit for a day after your pay lands, not before, and leave yourself margin for the interest that will be added to the balance each month.

An arrangement is not a settlement. The CRA's policy states it plainly: "Until an amount is paid in full, we will continue to charge interest at the prescribed annual interest rate." For the third and fourth quarters of 2026 that rate is 7%, compounded daily, applied to the tax, to any penalties already assessed, and to the interest already charged.

The arithmetic matters when you choose a schedule. A $12,000 balance paid at $1,000 a month clears in about 12 to 13 months and costs roughly $450 in interest along the way. The same balance at $400 a month runs for almost three years and costs more than $1,300 in interest, because each month's interest is charged on a balance that is falling slowly. Shorter is cheaper, and a schedule you can actually keep is cheaper than an ambitious one you break, because a broken arrangement invites enforcement and the costs that come with it.

Penalties are separate and are not waived by the arrangement. If the return was filed late with a balance owing, the late-filing penalty — 5% of the balance plus 1% for each complete month late, to a maximum of 12 months — was added the day after the deadline and now earns interest like the tax. Filing on time even without paying avoids this entirely; an arrangement cannot undo it after the fact, though the taxpayer relief provisions sometimes can, as described below.

The only thing an arrangement stops is enforcement. That is worth a great deal — a requirement to pay on your employer, or a lien on your home, costs far more than the interest — but it should be understood for what it is. Use our personal income tax calculator to size the balance you are actually facing before you propose a schedule.

An arrangement is a promise the CRA is tracking. Its rule on breaking one is unambiguous: "If you don't modify your payment arrangement before paying less than you agreed to, the CRA may proceed with legal actions to collect what you owe." The operative word is before. A payment that will be short or late is a problem you can manage if you change the arrangement first; the same payment missed silently is a default.

Modifying is not difficult. In My Account you can cancel a pre-authorized debit series and schedule a new one; through Manage balance you can contact your assigned officer; by phone you can renegotiate. What the CRA wants to see is that the arrangement still reflects your ability to pay. A job loss, a medical bill or a drop in business income are reasons to revise a schedule, not reasons to stop paying.

Understand what "legal action" means here. For income tax, the CRA generally cannot begin certain legal actions until 90 days after the notice of assessment, but once that window has passed — and for an established debt it long has — the tools are administrative and fast: a requirement to pay served on your employer or bank, refunds and credits applied to the debt by set-off, and certification in the Federal Court that operates as a lien on property. None requires a court hearing. A defaulted arrangement typically moves a file from a cooperative footing to that footing within weeks.

The reverse is also true. An arrangement that is honoured, with returns filed on time throughout, keeps the file quiet. Officers have discretion, and a taxpayer who has kept every promise and calls before a problem is treated very differently from one who is chased. For an owner whose corporation carries the debt, that discretion extends to the business account — which is why we keep the payment schedule inside the tax planning calendar alongside the filing dates.

The arrangement decides the schedule; the payment method decides whether each payment lands on time and against the right account. Several methods exist in 2026, and they differ in cost, speed and how much room they leave for error.

Two habits prevent most payment problems. Always pay against the correct account and period — a payment meant for a 2025 arrears balance that is coded to 2026 instalments sits as a credit on one account while the debt keeps compounding on the other, and untangling it takes a call. And keep the confirmation: when a payment is "missing", the confirmation number and the date are what the CRA needs to trace it.

For an arrangement, pre-authorized debit is the right default because it is scheduled once and cannot be forgotten. Online banking is the right tool for the one-off partial payment you make the day you file. The third-party credit card route has one legitimate use — a payment that must arrive before a hard deadline when nothing else can — and its 2.5% fee is a bad trade for anything else.

The other meaning of paying tax in payments is the one the CRA imposes rather than grants. If your net tax owing was more than $3,000 in 2026 and in either 2025 or 2024 — $1,800 for Quebec residents, because Quebec collects its own provincial tax — you are required to pay quarterly instalments toward the current year instead of one lump sum the following April. This is the normal condition of the self-employed, landlords, investors and retirees whose income arrives without withholding.

Farmers and fishers have a single instalment date of 31 December. Everyone else receives two reminders a year — February for the March and June payments, August for September and December — and the reminder amounts are calculated from your last two returns. Ignoring them is expensive: instalment interest at the prescribed rate runs on each late or short payment from its due date, and where that interest exceeds $1,000 in a year an instalment penalty is added on top — half of the amount by which the interest exceeds the greater of $1,000 or a quarter of the interest that would have applied had you paid nothing.

Instalments and arrangements interact. A self-employed person carrying an arrangement on last year's balance while also owing instalments on this year's income is servicing two schedules, and the second one is often the one that gets missed. Owners in this position — the professional services firms we work with are the usual case — generally do better setting aside a fixed percentage of each receipt for tax than trying to fund quarterly lumps from whatever is left.

A corporation pays its income tax in instalments whenever its tax payable exceeds $3,000 in the current or previous year — monthly by default, or quarterly for a Canadian-controlled private corporation that has kept a clean compliance record and meets the CRA's size conditions. The balance is due two or three months after the year end depending on the corporation's status, and instalment interest applies to shortfalls exactly as it does for individuals.

GST/HST works on its own calendar. Annual filers whose net tax was $3,000 or more in the previous fiscal year must pay quarterly instalments, generally one quarter of the previous year's net tax each; monthly and quarterly filers simply remit with each return. A business that cannot pay a GST/HST or corporate balance can arrange payment through My Business Account or with an officer, on the same ability-to-pay basis as an individual — our GST returns team handles the filings that have to be current before an arrangement is considered.

Payroll is different, and every owner should understand why. The income tax, CPP and EI deducted from employees' pay are not the corporation's money; they are held in trust for the Crown. The CRA treats unremitted source deductions as the most serious of tax debts, is far more reluctant to spread them over time, and can assess the directors personally — jointly and severally with the corporation — when the corporation fails to remit. The defence is due diligence: showing you acted as a reasonably prudent person to ensure remittance. A director who used payroll deductions to cover other bills has no such defence.

The practical rule for a business under cash pressure is therefore fixed: payroll remittances are paid first, on time, always; GST/HST next; corporate income tax is the balance that can, if it must, be arranged. Reversing that order converts a manageable corporate debt into a personal one.

The CRA distinguishes between a taxpayer who cannot pay quickly and one in genuine financial hardship, and it has more tools for the second. Its financial hardship page lists them: contacting the agency to discuss "deferring a payment to a later date, making a payment arrangement and other options"; the arrangement itself; and debt relief under special circumstances for those "having trouble repaying a debt because of financial or extraordinary circumstances".

Deferral is the least known. Where a short-term event — a hospital stay, a seasonal gap in income — means you cannot start paying now but can later, an officer can agree to defer the start of payments rather than begin enforcement. It does not stop interest, but it buys the time an arrangement needs.

Interest and penalty relief is the taxpayer relief provision: the CRA can cancel or waive penalties and interest where circumstances beyond your control — serious illness, a death in the family, a natural disaster, a CRA error, or financial hardship that makes paying the interest itself impossible — caused the problem. The request is made on Form RC4288 or by letter, within ten calendar years of the year the charges arose, with evidence attached. Interest continues to accrue while the request is reviewed, which is why it is filed alongside an arrangement rather than instead of one; if granted, the cancelled interest is credited back.

What the CRA will ask for is the same in every case: documentation of income, expenses, assets and liabilities, and the reasons the debt arose. Hardship relief is not a negotiation of the tax and it is not automatic; it is a discretionary decision made on evidence. Preparing that evidence properly — and knowing which of the three tools to ask for — is where advice earns its fee. Clients in Peel Region often start that work with our Mississauga tax accountants; the process is the same from anywhere in the country.

The CRA's own policy expects you to consider borrowing before it considers an arrangement, and for many people borrowing is also the better financial choice. The comparison is straightforward once the CRA's terms are understood: 7% interest compounded daily, no fixed end date, and a creditor with garnishment powers.

A secured line of credit or a mortgage refinance at a rate below 7% clears the CRA debt in one payment, stops the daily compounding, removes the enforcement risk entirely, and replaces the CRA with a lender whose remedies are slower and who has no set-off against your refunds and credits. For a homeowner with equity, this is usually the cleanest answer to a tax balance of any size.

An unsecured personal loan at a rate somewhat above 7% can still be worth it, because the CRA's interest is compounded daily on a balance that includes penalties, and because the arrangement carries default risk the loan does not. Where borrowing costs materially more — a credit card at 20% or more, or a third-party payment provider's 2.5% fee on top of card interest — the CRA arrangement is the cheaper debt, and the sensible plan is to arrange with the CRA and pay it down as fast as income allows.

The one thing not to do is borrow from the payroll account or the GST/HST collected from customers to pay a personal or corporate income tax balance. Those funds are held in trust, the CRA pursues them hardest, and directors are personally exposed for them. Paying one tax debt by creating a worse one is the most common way a manageable problem becomes an unmanageable one.

1. Arranging before filing. The CRA arranges payment on assessed debts. Unfiled years are estimated, penalised and reassessed later — file first.
2. Proposing a schedule you cannot keep. A self-serve PAD series accepted today and defaulted in March is worse than a smaller schedule negotiated on the worksheet.
3. Paying less without modifying first. The CRA's rule: modify before you pay less, or legal action may follow.
4. Paying into the wrong account or period. A credit on the 2026 instalment account does not reduce the 2025 arrears that are compounding.
5. Forgetting the arrangement does not stop interest. Budget for the balance to grow each month by the interest added; a schedule that only covers principal falls behind.
6. Missing the current year while paying the old one. New instalments and next April's balance still fall due; an arrangement on 2025 does not cover 2026.
7. Using trust funds to pay. Payroll deductions and GST/HST collected are the Crown's money; redirecting them creates director liability.

Each of these is avoidable with the same discipline: file on time, know the real balance, propose what you can prove you can afford, automate the payments, and call the CRA before a problem rather than after a letter. The fees for having this handled are modest against the interest and enforcement it prevents; our personal tax filing pricing covers a return with a balance owing and the arrangement paperwork at a fixed fee agreed before the work starts.

Paying your taxes in payments is a normal, sanctioned thing to do in Canada, and in 2026 it is easier to set up than it has ever been — a pre-authorized debit series in My Account, the Manage balance service, or a phone call. What it is not is a discount. The CRA's terms are fixed: file every return, show what you can afford, keep every payment or change the arrangement before you miss one, and accept that interest at 7% compounds daily until the balance is gone. Meet those terms and the enforcement machinery stays switched off; break them and it starts without a court order.

The decisions that matter are made before the first call: whether to borrow instead, how much to pay up front, what schedule you can actually sustain, and whether a taxpayer relief request belongs alongside the arrangement. For a business, one decision outranks all of them — payroll remittances first, always. If you are facing a balance you cannot clear at once, we will size it, prepare the CRA's worksheet, propose the schedule and keep your filings current while it runs. Fixed fees agreed before work starts, you pay after the service, 100% remote across Canada. Book a consultation online, or call +1 (416) 619-0068 with your notice of assessment to hand.