My employer was asked by revenue Canada to garnish my wages for the past 10 months and they have know taken off the correct amount owed. The problem is that instead of my employer sending that which was withheld from my pay for the garnish to Revenue Canada they kept the funds instead. Can this be considered theft or not and what can I do about this since my tax's have not been paid as of yet?

If your employer received a government order to garnish your salary and they did, in fact, do so (assuming you have pay stubs to show the deductions) and this amount hasn't been turned over to the correct government authority then you report it to that authority. Show then your pay stubs.

I have the proof, the pay stubs with the correct amounts on them and all of the paper work and I have submitted them to the government. The government is now stating that I am still responsible to pay the amount and that I'll have to get the funds back from my employer at another time. Now , I have been told that the Government may be bluffing just to get those tax's faster. Is that possible since the deductions have already been made ?

I think the govt is bluffing, but I would contact a local lawyer to be sure. The govt has the stronger case against the employer for defying a court order.

What has your employer said when you asked them, have they provided proof that they paid the money to the government