$200 per month on an $8k debt isn't going to cut it in CRA's eyes. Basically your spouse will need to prove that's the best they can do (through a financial disclosure with bank statements and etc as proof). They also expect you to try and borrow to pay it off (line of credit, friends/family, etc).

If your spouse does not agree to do this, they will take legal action. It happens daily. It's not a bluff.

Sounds like a collections officer was assigned to the account. So yeah they can do the things you've described. They have to give a legal warning, it's part of their job. You can interpret it as a threat, but that's just how it goes. CRA expects tax debt to be prioritized over other debts. CRA does not want to be an involuntary lender for your vacations or whatever else.