The Deferral Is Over: How Tariff-Hit Canadian Businesses Can Manage GST/HST Debt and CRA Collections in 2026, Before the CRA Decides for Them.

When the trade war landed in March 2025, it did more than raise prices. It rewrote the cash-flow math for thousands of Canadian businesses overnight. Steel fabricators in Hamilton, auto-parts suppliers in Windsor, distributors and contractors from Ottawa to Sault Ste. Marie watched input costs jump 25% on goods they couldn't source anywhere else. Ottawa responded with support: a deferral of corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, tariff remission processes, work-sharing, and loan programs.

But a deferral is not forgiveness. The bill from Ottawa outlasted the tariffs from Washington.

Most of Canada's counter-tariffs came off on September 1, 2025, with the exception of steel, aluminum, and autos, where they remain. The relief window closed. The support programs wound down or narrowed. And the balances that built up during the crunch didn't go anywhere. In 2026, the Canada Revenue Agency has moved from patience to collection, and the businesses hearing from CRA Collections now are, overwhelmingly, the same ones the tariffs hit first.

This is the story of how a cash-flow crisis quietly became a tax debt, why the CRA treats this kind of debt differently than any other, and what you can still do about it, strategically, before the CRA decides for you.

How a Cash-Flow Crisis Became a Tax Debt

When money got tight in 2025, business owners did what owners always do in a squeeze: they triaged. Suppliers got paid, because without inputs there's no product. Employees got paid, because without staff there's no business. Rent got paid, because the landlord doesn't wait.

And the GST/HST remittance slipped a quarter. Then two. For some, payroll source deductions slipped too.

It felt like borrowing from the one creditor who wasn't calling. But there is a problem, and it defines everything that follows: that money was never yours. GST/HST you collect from customers, and the income tax, CPP, and EI you withhold from employees' paycheques, are collected in trust for the Crown. In the CRA's eyes, a business that spends those funds hasn't fallen behind on a bill. It has spent someone else's money.

Why the CRA Treats GST/HST and Payroll Debt Differently

This is the part most owners learn too late.

Ordinary income tax debt comes with guardrails. The CRA generally has to wait 90 days after assessing before it can take collection action, and if you object, collection on the disputed amount is largely paused while the dispute runs.

GST/HST and payroll source deductions have no such guardrails. These amounts are collectible the moment they're assessed. Filing an objection does not stop CRA Collections from acting on them. And behind the debt sits a deemed trust, a statutory claim over the business's assets that ranks ahead of most other creditors, in many cases including the bank. That's why a GST/HST arrears problem so often becomes a banking problem: your lender's security may quietly sit behind the CRA's.

So while the tariff crisis felt like it bought understanding, the legal architecture never changed. A business carrying eighteen months of trust-fund arrears in 2026 is carrying the most aggressive category of debt in Canadian law, accruing interest at 7% compounded daily at current rates. On income tax balances, that interest isn't even deductible.

What CRA Collections Can Actually Do

When the CRA moves, it doesn't start with a lawsuit. It doesn't need one.

• Requirements to pay: The CRA can send a legal demand directly to your bank, freezing what's in the account, or directly to your customers, intercepting your receivables before they reach you. For a business that runs on invoices, a requirement to pay sent to your three biggest accounts is not just a cash seizure. It's an announcement to your market that you have a tax problem.

• Certificates and liens: The CRA can certify the debt in the Federal Court and register against your assets, with the effect of a judgment, no trial required.

• Set-off: Refunds, rebates, and credits you're expecting from any federal program can be applied against the debt before you ever see them.

None of this requires your agreement, and for trust-fund debts, none of it waits for your objection to be heard.

The Director's Personal Problem

For incorporated businesses, there's a second act. Under section 227.1 of the Income Tax Act and section 323 of the Excise Tax Act, directors can be held personally liable for the corporation's unremitted source deductions and GST/HST. That liability reaches personal assets: the house, the savings, all of it.

The profile the CRA is assessing in 2026 is precisely the tariff-era director, the one who kept the company alive through the worst of it by letting remittances slide. There is a due diligence defence, but it rewards what you actually did at the time to prevent the failure, such as segregating trust funds and documenting the steps you took. It does not reward the effort you made afterward to fix it. And there's a two-year clock: the CRA generally cannot assess a director more than two years after they effectively cease to be one. When a director resigned, and whether the resignation was legally effective, can be worth the entire assessment. These cases are won and lost on details like that.

If you're a director of a company with trust-fund arrears, or you recently resigned from one, this is not a conversation to postpone.

What a Payment Arrangement Really Is (and Isn't)

The good news: the CRA negotiates. Collections officers accept payment arrangements every day, and a well-structured arrangement can keep the bank account open, the receivables flowing, and the business running while the debt comes down.

The catch: an arrangement is built on full financial disclosure. Statements, receivables, asset lists, and sometimes personal finances too. What you disclose shapes what the CRA demands, and disclosure done carelessly can create new problems while solving old ones. The CRA expects the debt repaid in the shortest time your finances allow, interest keeps running throughout, and an arrangement doesn't extinguish the deemed trust or shield directors from personal assessment.

An arrangement is a negotiation with a sophisticated creditor holding extraordinary powers. It deserves the same preparation you'd bring to any negotiation with those stakes.

Interest Relief Is Real, and Refusals Can Be Challenged

The tax itself is rarely forgivable outside insolvency. But interest and penalties are different. The taxpayer relief provisions give the Minister discretion to cancel or waive them where circumstances beyond your control caused the default: a disaster, serious illness, CRA delay, genuine financial hardship. A trade war that erased your margins on a few weeks' notice is not a guaranteed win, but it is a serious argument, and on a large balance at 7% compounded daily, relief on interest alone can be worth tens of thousands of dollars. Relief generally reaches back up to ten years.

And here's what many businesses never learn: a taxpayer relief refusal is not the end. These are discretionary decisions, and discretionary decisions can be judicially reviewed in the Federal Court when they're unreasonable or unfair. Challenging the CRA's discretion in Federal Court is the core of what we do.

Owing Isn't Agreeing

One more distinction worth keeping sharp: some of these debts shouldn't exist in the first place. If the balance comes from an audit, such as denied input tax credits, reassessed subsidies, or recharacterized expenses, you have 90 days to object, and unresolved disputes go to the Tax Court of Canada. But remember the trap above: for GST/HST, the CRA can keep collecting while the objection runs. Disputing the debt and managing the collection are two tracks, and in 2026 they usually have to run at the same time.

When the Numbers Genuinely Don't Work

Sometimes the honest answer is that the debt exceeds what the business can ever repay. There are formal options, including proposals to creditors and restructuring, and we work alongside licensed insolvency trustees when that's the right road. But timing and sequence matter enormously: trust-fund claims and director exposure behave differently in insolvency than ordinary debt, and moves made in the wrong order can convert a corporate problem into a personal one. Get advice before choosing the road, not after.

Why a Tax Lawyer, Not Just an Accountant or a Broker

Your accountant kept the books through the tariff years. Your customs broker handled the border. But a CRA collections file in 2026 is a legal file: deemed trusts, statutory garnishment, director's liability, discretionary relief, Federal Court review. Only a lawyer can advise you under solicitor-client privilege, which matters intensely when the disclosure you make can be used against you. And only a lawyer can take the CRA's decisions to court when the discretion goes wrong.

The Legal Reality of 2026

The tariff shock is fading from the headlines, but its tax debts are just maturing. The routes are clear. Trust-fund arrears call for a negotiated payment arrangement, with disclosure handled carefully. Crushing interest calls for a taxpayer relief application, and a Federal Court review if it's refused. Wrong assessments call for an objection within 90 days and, where needed, an appeal to the Tax Court of Canada. Director assessments call for due diligence and limitation defences. Debts that genuinely can't be paid call for structured insolvency advice, taken in the right order. The one route that doesn't exist is waiting. Every quarter of silence adds compounding interest, hardens the CRA's position, and narrows your options.

Your Tax Problem Is Solvable. You Just Need a Strategy.

Fiszman Tax Law works with businesses and their owners across Ontario: manufacturers, contractors, importers, distributors, and owner-operators who came through the tariff years with the company intact and a CRA balance they never planned for. We're not here to judge the triage decisions you made in a crisis. We're here to get you out, strategically and respectfully, with the goal of limiting financial and legal harm.

If CRA Collections is calling, or if you know they're about to, we can help.