In fact, due to income protection laws in Canada, most creditors can only take up to the garnishment percentage limit of 30%, even with multiple creditor garnishments, unless they’re family support arrears, which allow wages in most of Canada to be garnished up to 50%. The only exception to these rules is the Canada Revenue Agency.
Garnishment Rules for the Canada Revenue Agency
In Canada, the CRA can garnish wages from all income sources under a Requirement to Pay, and no court order is required. In fact, they’re allowed to seize up to 50% of employment wages, and up to 100% of all self-employment and contract income for self-employed people. They’re even able to freeze your bank account and keep federal credit and benefits until your debt has been resolved.
Since a court order isn’t required and an RTP is sent to your employer and/or your bank, you may start having your wages garnished before you receive your copy of the RTP. So yes, technically, the CRA can start garnishing wages before you receive any notice, since this is considered to be one of many CRA source deductions. However, they will have tried to contact you many times to set up a repayment plan before they sent a garnishment notice to your employer.
How Much Creditors Can Garnish Per Province
While the general rule for creditors and wage garnishment is no more than 30% of your income, some provinces have their own provincial garnishment limits for judgment creditors.
| Province | Amounts |
| British Columbia Garnishment Rules | The standard 30% can be garnished, with 70% of your income being protected. |
| Alberta Garnishment Rules | The first $800 is protected; 50% of income between $800 and $2,400 can be garnished; and 100% of amounts above $2,400. |
| Ontario Garnishment Rules | Up to 20% of your net pay using a disposable earnings calculation. |
| Quebec Garnishment Rules | Up to 30% of your gross wages, with some small exemption amounts due to dependants. |
With all this in mind, it’s important to note that these garnishment exemption thresholds don’t apply to federal debts. There are separate federal rules for these types of debts. These are also exceptions to income other than employment income. In fact, under self-employment garnishment rules, self-employment and contractor income can be garnished up to 100%, rather than the specified employment income amounts.
When A Creditor Can Start Garnishing Your Wages
While government agencies like the CRA can bypass getting a garnishee summons to start garnishing your wages, other creditors can’t. In fact, you need to have 3 to 6 months of missed payments before the creditor can sue you and begin the garnishment process. That said, they must obtain a judgment and a garnishment order before they can even begin.
That said, what you also have to consider is the statute of limitations on garnishment. When it comes to unpaid debt, though, the statute of limitations varies from province to province.
| Province | Statute of Limitations |
| British Columbia | 2 years |
| Alberta | 2 years |
| Saskatchewan | 2 years |
| Manitoba | 6 years |
| Nova Scotia | 2 years |
| New Brunswick | 2 years |
| Newfoundland and Labrador | 2 years |
| Prince Edward Island | 6 years |
| Quebec | 3 years |
| Ontario | 2 years |
| Nunavut | 6 years |
| Northwest Territories | 6 years |
| Yukon | 6 years |
One thing to know about the statute of limitations is that it starts on the date of your last payment on the unsecured debt owed. However, if you make a payment after that, even if the funds are in debt collection with collection agencies, the timeline will restart, which, under garnishment laws, will allow collectors to sue for bank account garnishment or even garnish wages from an employee’s pay.
Are EI and CPP Income Protected From Garnishment?
As we mentioned earlier, the rules governing wage garnishment between private creditors and the government differ. CPP (Canada Pension Plan) and EI (Employment Insurance) income are protected from private creditors and considered exempt income in Canada. However, it can still be garnished for government debts.
How to Legally Stop Wage Garnishment
While wage garnishment can be frightening, there are ways you can legally stop it. You can do this by speaking to a licensed insolvency trustee and filing for either a Consumer Proposal or Bankruptcy. Once you do this, it will trigger an immediate stay of proceedings, and a garnishment release letter will be issued under the Bankruptcy and Insolvency Act. This will stop all creditors, including the Canada Revenue Agency, from garnishing your wages.
When dealing with collection calls, wage garnishment, and other civil procedures where you’re legally obligated to make payments, the best thing you can do is get professional advice. Not only will they help establish legal protection for you. Even before the process begins, they can help you when it comes to dealing with multiple garnishments, making payment arrangements, and even more complex debt problems like CRA debts.
Can Employers Refuse to Garnish Your Wages?
In Canada, employers are legally obligated to comply with wage garnishment orders. This includes both a court order and a formal CRA Requirement to Pay for tax debt, since they’re both considered to be legal action. That said, they are also required to refuse any invalid requests.
The Consequences of Refusing
When an employer refuses to enforce a legal wage garnishment, they could incur serious consequences.
- If the company pays the funds to the employer anyway, it could be liable for the entire debt.
- The creditor could request that the court hold the company and its payroll officers in contempt.
- For CRA garnishment, the CRA can both initiate legal proceedings and pursue corporate asset seizures against the business.
Changing Jobs During Wage Garnishment
If your wages are being garnished and you change jobs, your wages will still be garnished, but the garnishment will pause temporarily. The deductions from your old job will stop the moment you receive the funds from your last pay period. Still, since the court order won’t automatically transfer to the new job, garnishment won’t begin again until the creditor has tracked down your new employer.
However, you do have to consider that there will be some consequences to this. The first is that money not collected between jobs will still be owed. This means that your debt will remain higher for longer. There may also be an additional tracking fee added to your total debt. To avoid this, you can notify either the court or the creditor of your change in employment.
Differences Between a Garnishment and a Wage Assignment
While both of these processes involve paying back the funds that you owe, they work a little differently. The simplest way to differentiate between them is that a wage garnishment is court-ordered, whereas a wage assignment agreement is voluntary.
Wage Garnishment: These can’t be started or stopped without a court judgment, a consumer proposal, or bankruptcy. It’s commonly used for unpaid taxes, child support payments, defaulted student loans and unpaid consumer debts such as:
- Personal loans
- Lines of credit
- Credit card debt through credit card companies
Wage Assignment: For this agreement to take effect, the employee must sign an agreement authorizing the lender to garnish their wages if they fall behind on payments. It’s mainly used by credit unions and for personal finance contracts.
Can Changes Be Made to Wage Garnishment Due to Financial Hardship?
If you’re having trouble with your financial situation and are unable to afford the wage garnishment amounts approved by the court order, then you’re able to ask for one of the following options during the garnishment appeal process through a garnishment hardship application:
- Reducing or releasing the order
- Negotiating a new payment plan
If the legal proceedings don’t help, then you can also file for a consumer proposal to stop garnishment or bankruptcy. These are the only things that can override a garnishing order since you are legally required to repay the funds.
Losing Your Job Due to Wage Garnishment
You aren’t able to be terminated just because your wages are being garnished. In fact, both federal and provincial laws prohibit it. In fact, while they can’t fire you, they also can’t suspend or penalize you for having your wages garnished. Any employer who does will face fines or other legal penalties.
Income Types That are Protected From Garnishment
Certain income sources are protected, such as EI and CPP; these protections don’t apply to government collectors, like the CRA, if you owe taxes or child support. However, other income types that protect against private creditors include Old Age Security, Social Assistance, and Income Support.
How Garnishment Works for Child Support
Wage garnishment for child support in Canada works differently from standard wage garnishment. Before child support can even be established, a child support order and a separation agreement must first be in place. Suppose the payments fall behind; a garnishment order can be issued directly to the employer without filing a court order. As with any other type of wage garnishment, the employer must comply with the specified amount. This amount is then sent to the child support enforcement program.
Negotiating With Creditors to Prevent Wage Garnishment
When it comes to wage garnishment, it’s difficult to negotiate a payment plan after the wage garnishment starts. Negotiating before wage garnishment starts, however, is very possible. Many times, cooperating with a creditor will allow you to find a payment plan that works for you, or even negotiate a settlement.
When it comes to negotiating, the first thing you want to do is contact either the creditor or a collection agency before your employer is given the garnishment order. You can then offer a realistic amount that you can afford. While they won’t commonly do this after a garnishment order is made, doing so before will be much more successful.
Once you’ve negotiated with a creditor, you should always get an agreement in order before you start making any payments. This is because making a payment can impact the payment date on your debt, and without a written agreement, you have no proof of the deal.
Final Thoughts
While wage garnishment is often a last resort in Canada, it isn’t uncommon. If a creditor wants their money, and they can prove that you owe it, this method allows them to get their money if you’re unwilling to cooperate.
Just because a wage garnishment is issued, though, this doesn’t mean that you’re out of options. In fact, debt solutions like filing for a consumer proposal or initiating bankruptcy will stop garnishment. From there, a licensed insolvency trustee can help you with the next steps to regain control of your financial health.
