This is not an encumbrance, a lien, or a stale debt. It is the money being intercepted in the hands of the people who owed it.
Short answer
Yes — a requirement to pay under section 224 of the Income Tax Act lets the CRA order anyone who owes money to a tax debtor to redirect that payment straight to the Receiver General instead, and once the customer complies, the debt to the original creditor is legally extinguished. If you have bought receivables that were subject to one, the invoice is gone, not merely disputed.
Section 224(1) is broad by design: where the Minister “has knowledge or suspects that a person is, or will be within one year, liable to make a payment to another person who is liable to make a payment under this Act,” the Minister may require that first person to pay the money “otherwise payable to the tax debtor” directly “to the Receiver General on account of the tax debtor's liability.” A customer who owes the target money is squarely inside that definition. Once they comply, s.224(2) closes the loop: “the receipt of the Minister for moneys paid as required under this section is a good and sufficient discharge of the original liability to the extent of the payment.”
That discharge is the whole risk for a buyer of accounts receivable. It is not a claim against the receivable that a court could later resolve in the buyer's favour — the underlying debt simply ceases to exist to the extent it was paid to the Crown instead of to its rightful creditor.
This is why it is invisible to ordinary diligence. A requirement to pay is not registered anywhere a PPSA or corporate registry search would find it — it is a letter the CRA sends directly to the third-party debtor, and the only record of it sits in that customer's own correspondence file. Confirming receivables are clean means asking the company's largest customers directly whether they have received one, not relying on a search result showing nothing.
In an asset deal the underlying tax liability itself does not transfer to the buyer the way it would in a share purchase — but the collection action can still reach the specific receivables the buyer is paying for, which is a narrower problem than inheriting the tax debt outright.
A 30-minute call is enough to tell you which of these facts applies to your deal.
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