Whether you owe $50 or $50 million to the Canada Revenue Agency ("CRA"), tax debt is undoubtedly a source of stress. This is partially due to the CRA's extensive collections powers, which sets them apart from regular creditors when it comes to enforcement and recouping the debt (see The Power and Limits of CRA Collections (rosentaxlaw.com) for more on this topic).
If you are returning to Canada after an extensive absence or visiting family, but still owe the CRA money, the question may arise: Can I be detained at the border for tax debt?
The simple answer is that, in most cases, this is incredibly unlikely.
Tax Debt is a Civil Matter
While the terms seem similar, there is a stark difference between tax evasion (a criminal offence) and tax avoidance/simply owing arrears to the CRA (a civil debt obligation), for more information on the difference between the two, please refer to Tax Evasion vs. Tax Avoidance.
The difference is that like most civil debts, there is no danger of being detained unless there has been a court order issued by a judge demanding your arrest (which are incredibly rare for tax arrears). Examples of debts that put one at risk of detainment at the border are:
- Spousal or child support owing; and/or
- Criminal fines.
Tax Evasion
If you do fall into the category where you've been criminally charged with tax evasion, then you may face detainment if there is a warrant out for your arrest. As a criminal offence, tax evasion will be treated as such, and can lead to detainment at the border.
Though the CBSA (the Canada Border Services Agency) and its enabling legislation and regulations focus much more on detaining those convicted of crimes that pose a danger to the public, such as violent crimes and narcotics distributions, one cannot rule out the possibility of detainment if they have left the country with a warrant out for their arrest.
Detainment would not be Beneficial for the CRA
One of the main reasons why detainment based on debt owing to the CRA is unlikely is because the CRA's powers can be employed with or without you in custody and are more effective when you are not in custody. Below, three of the common CRA enforcement powers are examined in the context of detainment.
Placing a lien on your property and forcing sale: If you are returning to the country and you left property in Canada with tax debt, the CRA can take this step whether or not you are present in Canada.
Issuing third-party liability to someone you transferred property to: Again, this would not be impacted heavily if you left the country, so re-entry is not a concern as the CRA would likely already be going after the transferee.
Garnishing wages: This method of recovering tax debt is much easier if the individual that they are garnishing is free to work and earn wages, rather than in a border detention centre.
While this cannot be counted on as protection from detainment, the above illustrates that the CRA both 1) does not need to detain you to collect on debt owing and 2) is likely to actually collect more effectively if you are actively participating in society.
Conclusion
The situation and its consequences will vary depending on a multitude of factors, such as the type of debt, the legal status of the individual (citizen, non-resident, permanent resident), has the debt been certified and how long the debt has been outstanding.
When entering Canada, always remember to comply with all CBSA policies to avoid detainment or charges. Tax debts owing are unlikely to give rise to detainment, but this is not to guarantee its impossibility.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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