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  • Writer's pictureDavid Mu

Be Aware of the CRA's Strategy: Offsetting Tax Debts with GST Refunds

The Canada Revenue Agency (CRA) has a policy of offsetting taxpayers' debts by applying tax refunds and benefit payments, such as the GST/HST credit, to these debts. This practice, known as "offsetting," is a standard procedure used by the CRA for efficient debt recovery and has been in place since before the COVID-19 pandemic.

Offsetting involves the proactive application of any tax refunds and benefits to outstanding tax and other government debts. This procedure was temporarily paused in May 2020 as a part of COVID-19 relief measures to support taxpayers during that challenging period. However, since October 2022, the CRA has resumed these activities, applying personal income tax refunds towards recovering outstanding debt, especially those related to COVID-19 benefits. This resumption was further reinforced following recommendations in the Auditor General of Canada’s 2022 reports.

The offsetting process also applies to other types of benefit payments, with specific rules regarding how these payments can be applied to debts. For example, the Canada child benefit (CCB) payment can only be used to offset a CCB debt. Other child benefit payments are similarly restricted to debts related to the same benefit.

The CRA acknowledges that some individuals and families might still be experiencing financial challenges and encourages those facing such difficulties to contact them to discuss available options, even if a payment plan is already in place.

For more detailed information on how the CRA applies these payments to offset debts, you can visit the Canada Revenue Agency's official pages:

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