Do You Have to Pay Disputed Tax While Your CRA Objection Is Pending in Canada?

You have filed a notice of objection to a CRA assessment, and the balance owing is still on the books. The natural worry is whether the CRA can collect that money while you wait for an answer, and whether interest keeps growing.

The answer depends on the type of tax, who you are and what the amount relates to. This article explains the general income tax rule, the exceptions, how interest works, and how GST/HST differs.

This article covers Canadian federal tax law, which applies in every province.

The general rule for income tax

Generally, you do not have to pay disputed income tax until the objection review is complete. The Income Tax Act backs this up. After a notice of objection is served, the Minister cannot take collection action on the disputed amount until 90 days after the day notice of the decision confirming or varying the assessment is sent.

In practice, the CRA says it normally postpones collection until 90 days after it sends its decision. The hold covers the amount you are disputing. It does not mean the whole tax system pauses for you, and the exceptions below matter.

Interest keeps running, so early payment can help

Interest keeps accruing on disputed income tax during an objection. Paying all or part of the disputed amount stops further interest on the amount you paid. If the CRA agrees with you, the payment is refunded.

Whether to pay early is a judgment call. Paying limits interest, but it ties up your money while the review continues. An accountant or lawyer can help you weigh that against your position.

How long interest builds depends on how long the review takes. For income tax objections resolved in August 2026, the average was 145 days for low complexity matters such as credits, deductions and the Canada child benefit, and 403 days for medium complexity matters such as business expenses, partnerships and T2 issues. High complexity matters, such as large corporations, transfer pricing and GAAR, took over 690 days. These are averages that change, and the time counted excludes the time taxpayers take to provide more information.

If you have paid the disputed amount and receive no decision within 120 days of filing, you can request a refund of it. For large corporations and charitable donation shelter cases, the refund is limited to half. A separate request like this goes to the Chief of Appeals with your case number.

Exceptions to the collection hold

The hold is not absolute. These situations are treated differently:

• Amounts you were required to withhold and remit, such as source deductions, must still be paid on time, and collection is not postponed for them.
• The collection restrictions do not apply to assessments under ss.152(4.2), 169(3) or 220(3.1), or to amounts under Part VIII, s.281, amounts that must be withheld and remitted, certain s.116 tax, and related penalties and interest.
• A large corporation (taxable capital employed in Canada, with related corporations, over $10 million) or a taxpayer in certain tax shelter cases can be required to pay one-half of the assessed amount within 90 days of the notice of assessment. The CRA describes this as paying 50% of the disputed amount.

If you think one of these exceptions might apply to you, confirm it early. Missing a required payment can lead to collection action even though an objection is pending.

If you appeal to the Tax Court, and how GST/HST differs

The hold continues if you take the matter further. Once you appeal to the Tax Court of Canada, collection of the disputed amount is barred until the Court's decision is mailed to you or you discontinue the appeal, whichever comes first. The same applies to a question referred to the Court.

GST/HST works differently. The CRA says it can keep collecting amounts you owe while a GST/HST objection is pending, unlike income tax. Interest still applies, and you can pay all or part of the disputed amount to limit it.

What to do next

• Check your notice of assessment and work out which tax and which amounts are in dispute.
• Separate any amounts you were required to withhold and remit, and keep paying them on time.
• Decide, with your accountant or lawyer, whether to pay all or part of the disputed amount to stop interest.
• Keep your case number and quote it in all later correspondence with the CRA.
• If you have paid and no decision arrives within 120 days of filing, consider requesting a refund.
• If you are a large corporation or in a tax shelter case, confirm whether the 50% payment applies to you.

Because the rules differ by tax, taxpayer type and the nature of the amount, a lawyer or accountant can confirm what applies to your situation.

Frequently asked questions