Possibly. If you own a home and have enough available equity, refinancing may allow you to access funds that can be used to pay an outstanding CRA balance.

Whether refinancing is available will depend on factors such as your home's appraised value, current mortgage balance, income, credit, other debts, the amount owed to the CRA and the lender's qualification requirements.

The goal should be to determine whether using home equity creates a manageable overall financial plan, rather than simply moving the tax debt into your mortgage without looking at the total cost.

Canadian homeowners may generally be able to borrow up to 80% of their home's appraised value through certain forms of home equity borrowing, subject to lender approval.

That does not mean you can withdraw 80% of the home's value in cash. Your existing mortgage and other financing secured against the property must be taken into account.

For example, if a home is appraised at $800,000, 80% would be $640,000. If the existing mortgage and other secured obligations total $500,000, the theoretical remaining equity available within that limit would be $140,000. The actual amount available could be lower depending on qualification, the property, lender policies and other costs associated with the refinance.

A CRA lien does not necessarily mean refinancing is impossible, but it can make the transaction more involved.

The CRA can register a lien or charge against property to secure unpaid tax debt. Once registered, that claim can affect the property's title and the priority of other creditors. In many cases, the CRA removes its lien after the secured debt has been paid in full.

If refinancing is being used to pay the CRA balance, the mortgage lender, lawyer or notary and the CRA may need to coordinate how the debt will be paid and how the lien will be dealt with as part of the transaction.

If you know that a lien has already been registered, it is better to address it early in the refinance process rather than discovering it close to closing.

It depends on your financial situation. The CRA may allow taxpayers who cannot pay their balance immediately to arrange payments over time. Refinancing is a different option that may allow a homeowner to use available equity to pay some or all of the tax debt.

A payment arrangement may avoid increasing the mortgage secured against your home, while refinancing could potentially provide a way to deal with a large balance more quickly. However, refinancing can involve mortgage interest, legal fees, appraisal costs, possible lender fees and changes to your mortgage payment or amortization.

Compare the monthly cash flow, total borrowing cost, mortgage terms and risks of each option before deciding. If you are already dealing with a CRA collections officer, continue communicating with the CRA while you investigate mortgage financing.

Do not ignore CRA correspondence about an outstanding tax balance. The CRA recommends contacting them if you cannot pay your debt in full or on time, and payment arrangements or other options may be available depending on your circumstances.

Unpaid tax debt can continue to accumulate interest, and the CRA has legal collection tools that can include garnishing income or accounts and placing a lien on assets such as a home.

If you are a homeowner in Nanaimo, Parksville, Nanoose, Ladysmith, Victoria or elsewhere on Vancouver Island and believe your home equity may provide another option, it can be useful to review mortgage financing early. Knowing how much equity may actually be accessible can help you compare refinancing with the other repayment choices available to you.