Falling behind on your taxes in Canada can feel like a dirty secret. One year turns into two. You move, change jobs, get overwhelmed, or scared, or maybe the money simply wasn’t there. And suddenly, you’re Googling things like what happens if I haven’t filed in 5 years while dodging CRA letters you’re too nervous to open.
Here’s the truth: thousands of Canadians are in the same position. What matters now is not how it started, but how you fix it. And you can fix it. Quietly, legally, and without a criminal record. You just need to move before the CRA moves first.
Let’s walk through what happens if you don’t act, what your options really are, and how Faris CPA helps clients take control, without the judgment, fear tactics, or fluff.
What Happens If You Haven’t Filed Taxes in Years?
Not filing taxes isn’t just an oversight. After a certain point, it becomes a red flag for the Canada Revenue Agency (CRA). Here’s what you’re risking:
- Penalties and interest. The CRA charges late-filing penalties (5% of your balance owing, plus 1% for each full month your return is late, up to 12 months). Then interest on top of that.
- Audits and reassessments. If the CRA believes you’re hiding income, they’ll reassess past years, even without your input.
- Legal action. In extreme cases, not filing taxes can lead to criminal prosecution. Yes, criminal. Jail time is rare, but having your assets seized and your paycheques and/or bank accounts garnished is not.
And once the CRA starts an investigation, your chance to come forward voluntarily and avoid those worst-case outcomes? It disappears.
Common Reasons Canadians Fall Behind on Their Taxes
Before we go further, let’s drop the shame. There are plenty of reasons people fall behind on taxes. Here are some of the most common:
- Self-employment or gig work. Without an employer withholding taxes, it’s easy to underestimate what you owe.
- Illness or family crisis. Life doesn’t pause for tax season.
- Fear of owing. Some people avoid filing because they know they’ll owe, but that avoidance makes the penalties even worse.
- Complex finances. If you’ve sold a property, traded crypto, or run a small business, filing gets complicated fast.
- Cash jobs or undeclared income. If you’re unsure how to report what you made, or if the CRA will come after you for it, you might freeze.
Even sex workers and creators on platforms like OnlyFans are often left guessing about how to handle taxes. If that’s you, here’s how sex workers pay taxes in Canada and why it’s smarter to get ahead of it now.
The CRA’s Power: Audits, Penalties, and Prosecution
If you’ve heard that the CRA is “aggressive,” it’s because they are. They don’t just rely on what you tell them. They cross-check data with banks, employers, and payment platforms like PayPal. And yes, they can request third-party records without your permission.
They can even look at your online transactions. If you’re selling through Etsy, Facebook Marketplace, or PayPal, the CRA is watching. Here’s their stance on PayPal income.
If you’ve received a Notice of Reassessment, audit letter, or demand to file, things are already in motion unless you do something about it. After some time has passed without payment or an arrangement to pay has been made, the CRA can:
- Freeze your bank accounts
- Garnish wages
- Place a lien on your property (Learn more about tax liens in Canada)
The Voluntary Disclosures Program (VDP) Lifeline
The Voluntary Disclosures Program is a legal way to come clean with reduced penalties and, most importantly, protection from prosecution.
But there’s a catch: you have to apply before the CRA contacts you.
The VDP is open to individuals and businesses who:
- Failed to file a return
- Made mistakes on previously filed return(s)
- Failed to report income
- Claimed ineligible expenses
- Did anything that could result in a penalty or prosecution
If you qualify, the CRA may waive penalties and reduce interest. You’ll still need to pay what you owe, but you can do it on your terms, with a clean slate.
How Faris CPA Helped Clients Fix Tax Return Problems
At Faris CPA, we’ve helped Canadians from every province and territory get out of the hole. We’ve:
- Helped a contractor file eight years of unfiled taxes and avoid over $60,000 in penalties through the VDP
- Defended a business owner during a full CRA audit and settled with no criminal charges
- Supported a self-employed client through backfiling and negotiating a payment plan that actually worked for their budget
And we’ve done it without judgment, shaming, or fear tactics. Just straight answers and smart, confidential support.
Why You Need to Act Before the CRA Ramps Up Enforcement
The CRA continually invests in new enforcement tools, including AI-driven audits, financial data mining, and enhanced information sharing among agencies. That means the window for coming forward voluntarily is shrinking.
And when they find you first, VDP is no longer an option.
Waiting feels easier, but it makes everything harder. You don’t need to wait for a knock at your door or a freeze on your accounts.
What Happens After You Reach Out to Faris CPA?
Here’s what the process looks like when you contact us:
- Confidential consultation. You tell us what’s going on. We don’t judge. We listen, assess, and explain your rights.
- Document review. We gather your financial records, slips, and supporting documents, even if you don’t have everything.
- Strategy. We decide whether you qualify for the VDP, or if another option (like a Notice of Objection or audit defence) is better.
- Submission & negotiation. We handle the paperwork, submissions, and negotiations with the CRA, so you don’t have to speak to them directly.
- Resolution. You get back on track, clean up your history, and move forward without fear.
This is what CRA tax audit services should look like: professional, discreet, and effective.
How a CPA Differs from a Tax Lawyer (And Why It Matters)
You don’t need a courtroom. You need someone who can deal with the CRA efficiently and cost-effectively. That’s where a licensed CPA like Sam Faris comes in.
Unlike lawyers who focus on litigation, we focus on resolution: filing, fixing, negotiating, and defending. We understand CRA language, processes, and pressure points.
Here’s more about Faris CPA, including our national scope, CPA leadership, and success rate.
What If You Have Undeclared Income?
If you’ve worked in cash, traded crypto, or sold goods or services online, undeclared income can become a massive liability. The CRA doesn’t just penalize unreported earnings; they assess based on what they think you made, often with harsh assumptions.
The VDP is the best route if you want to disclose undeclared income safely. But if the CRA already contacted you, we’ll work to build your defence and minimize penalties.
Need help understanding how property sales factor in? Here’s our explainer on proceeds of disposition and how they apply to capital gains.
Tips for Coming Forward Without Making It Worse
Timing and accuracy matter. Here’s what to avoid:
- Don’t call the CRA before speaking to a professional. You might say something that hurts your case.
- Don’t guess your income or deductions. Round numbers look suspicious.
- Don’t delay if you’ve received CRA mail. If there’s a reassessment or demand letter, time is already running out.
Instead, get professional help. You don’t have to figure this out alone.
What If You Can’t Pay What You Owe?
Aside from unfiled tax returns, tax debt can also be a heavy burden. The good news? You don’t need to pay it all upfront to start fixing things. Here are a few realistic options:
- Payment arrangements. If you owe but can’t afford a lump sum, the CRA may allow monthly payments. But don’t negotiate this alone; they might not offer their best terms unless pushed.
- Taxpayer relief. In some cases, we can apply to reduce interest and penalties due to hardship, illness, or financial disruption.
- Reassessment adjustments. If the CRA overestimated your income, we may challenge it and lower your balance.
The worst move is silence. Let us deal with the CRA, not your voicemail.
The CRA’s Tactics: What to Watch For
The CRA starts with polite letters. But if they suspect you’re hiding something, they can escalate quickly.
Here are a few other tools at their disposal:
- Requirement to file notices. These are formal demands, not suggestions. Ignore them, and the CRA will assess your return without your input.
- Arbitrary assessments. If you don’t respond, the CRA can guess what you owe,usually on the high side.
- Legal collection. The CRA has the authority to garnish your wages, seize bank funds, or register liens on your property without going to court.
At Faris CPA, we know how the CRA works because we’ve defended clients against them for years. We respond decisively on your behalf.
Why VDP Applications Fail (And How We Make Them Work)
Not all Voluntary Disclosures Program (VDP) applications are accepted. Submitting one doesn’t mean automatic protection.
Common reasons for rejection:
- You were already under audit or review when you applied
- Your disclosure wasn’t complete or accurate
- The application looked like an attempt to game the system
We don’t let that happen. At Faris CPA, we ensure:
- Full and accurate disclosure that qualifies under the VDP
- Strategic timing before CRA inquiries begin
- Proper documentation, so your application doesn’t raise red flags
This isn’t DIY territory. It’s a legally binding tax resolution, and it’s what we do.
If You’ve Already Been Contacted by the CRA
Let’s say the CRA already reached out. Does that mean it’s too late? Not necessarily.
While VDP may no longer be an option, there are other tools we can use:
- Notice of Objection. If you disagree with a reassessment, we can file a formal objection and pause collection action while it’s reviewed (except for GST/HST (re)assessments).
- Taxpayer relief request. For penalties and interest related to extraordinary circumstances.
- Audit defence. If you’re being audited on unreported income/unfiled returns, we communicate with the CRA on your behalf, supply evidence, and challenge unreasonable claims.
This is where a licensed CPA with CRA experience makes all the difference. If you’re already on their radar, don’t face it alone.
Why National Reach Matters (Even If You’re in a Small Town)
Whether you’re in Toronto, Vancouver, Yellowknife, or a rural part of Alberta, Faris CPA works with clients across Canada. That matters because:
- CRA enforcement is national; your location won’t protect you
- Our solutions are compliant with federal tax law, not just provincial requirements
- We’ve seen every variation of tax problem you can imagine
When you’re dealing with the CRA, the quality of your representation matters more than where they’re based. We bring national experience to your individual case.
Don’t Rely on “No News Is Good News”
Silence from the CRA doesn’t mean they forgot about you. In fact, they may already be watching. Their systems track:
- Missed T-slips or earnings reports
- Property sales without capital gains declarations
- GST/HST inconsistencies
- Unreported income through digital platforms or foreign accounts
Just because they haven’t sent you a letter yet doesn’t mean you’re off their radar. If anything, you’re giving them more time to build a case against you, without your input.
We’ve worked with clients who thought they were in the clear until a surprise audit arrived, years later. The earlier you act, the more control you have over the outcome.
What Happens During a CRA Reassessment
If you’ve already filed but the CRA doesn’t like what they see, they may send you a Notice of Reassessment. This is not just a suggestion; it’s a formal recalculation of what they think you owe.
And if you don’t respond?
- They can start collections
- Add interest daily
- Limit your options for appealing
Here’s where we come in: Faris CPA will review the reassessment line by line, challenge any unfair assumptions, and file objections where appropriate. If you’ve received a reassessment or know one is coming, let’s talk before the time runs out on your recourse options.
Explore how we offer CRA reassessment support across Canada.
What If You’re Behind on GST/HST?
Filing personal taxes is one thing. Falling behind on GST/HST is a whole other level of CRA scrutiny. If you’re self-employed or own a business, unfiled GST/HST returns can trigger:
- Immediate CRA collections
- Business account freezes
- Legal action for trust funds withheld
Unlike personal tax debts, GST/HST amounts are treated as money you collected on the government’s behalf. That makes the consequences more severe.
If your business is behind, it’s not too late. We help clients bring GST/HST filings up to date and negotiate repayment options quickly and discreetly.
The Hidden Risk of “Partial Disclosure”
Some people try to test the waters with the CRA by sending in one late return. They hope it won’t trigger a deeper review. It usually does.
The CRA is trained to look for patterns. If you file one return and they suspect you’re missing others, they’ll dig deeper. This strategy backfires.
At Faris CPA, we guide you through full, strategic disclosure, the kind that builds trust with the CRA and qualifies you for actual relief. No guesswork. No accidental red flags.
Half-steps lead to full consequences. If you’re going to come clean, do it right the first time.
The Emotional Cost of Tax Anxiety
Let’s talk about the part no one puts in writing: the stress. The fear of that knock on the door. The unopened mail piling up. The constant background hum of “what if.”
We’ve spoken to clients who haven’t travelled in years, afraid a tax issue might flag them at the border. Others couldn’t sleep, worried about wage garnishment or frozen accounts.
The emotional toll is real, and so is the relief when it’s finally over.
Solving tax problems isn’t just about numbers. It’s about peace of mind. You don’t need to carry this by yourself anymore.
Let’s Recap: Your Options, Your Rights, Your Move
If you’ve read this far, you’re likely carrying a lot of stress about unfiled taxes. So here’s what to take away:
- You can fix this, even if it’s been years.
- The CRA is watching, and their tools are getting sharper.
- The Voluntary Disclosures Program is a limited-time opportunity. Once the CRA contacts you, it’s gone.
- Faris CPA helps Canadians clean up back taxes, navigate CRA audits, and regain peace of mind.
You don’t have to panic. But you do have to act.
Final Call: Stop Living in Fear of the CRA
Let’s be clear. Ignoring tax problems never makes them go away. But solving them? That’s easier than you think when you have the right team behind you.
Whether it’s unfiled returns, undeclared income, or a CRA reassessment, Faris CPA will help you take control. No lectures. No scare tactics. Just expert solutions, handled discreetly and efficiently.
Don’t wait for the CRA to find you first.
