Tuesday, 26 April 2011

Late Filing Your Tax Returns? Tax Tips for Those Who Know They Will Owe

It’s really easy to fall behind filing your income tax returns, especially if you failed to file because you were unaware that you owe money. Some individuals find the idea of dealing with the Canada Revenue Agency and a tax debt so stressful that they succumb to wilful blindness. They fail to file so that they will not have to face their tax debt.

If you are behind filing your tax returns, the simple truth is, the faster you face it, the better off you’ll be. If you have an idea of what you will owe and it is much more than you can afford to pay, be warned, the Canada Revenue Agency will still demand payment in full and they will pursue the money. This could be done by imposing a wage garnishment, freezing your bank account or by placing a lien on your home.

If you own a home, you have even more to lose. If the sum of your mortgage(s) and your tax debt exceeds the value of your home, you must act fast. If the Canada Revenue Agency places a lien on your home it is very hard to get it lifted. Even if you hire an expensive tax lawyer or file for bankruptcy, once the Canada Revenue Agency has secured its interest through your home, you will have little or no negotiating power. If you are able to raise a lump sum payment you may be able to get the Canada Revenue Agency to postpone their position on title, but make no mistake – as long as you owe the Canada Revenue Agency money, they will not leave your home alone.

If you act and make the difficult but correct decision before enforcement action occurs, you will be one step ahead of the game.

There are a number of programs that have been introduced by the Federal Government that can enable you to deal with your tax debt without facing Canada Revenue Agency enforcement action. In turn, these programs can also keep your home and others assets safe.

If the Canada Revenue Agency has already come after you, these programs will stop most Canada Revenue Agency collection action, including frozen bank accounts and wage garnishments. In the case of a property lien, you must act prior to a lien being placed on your home. Now, if you have a tax lien on your home and the combined total of your mortgage(s) and tax debt is less that the value of your home, you can also be successful at making tax settlements that involve some debt consolidation.

Your financial circumstances will dictate how you are able to deal with your tax debt. If the facts are that you cannot pay and are insolvent, hiring expensive lawyers and accountants will prove to be an exercise in futility. If you have assets to protect, do not go directly to a trustee. They have a responsibility to protect both you and the Canada Revenue Agency.

The best tax advice we can offer is to establish a relationship with a financial consultant who has the experience, expertise and access to government programs that will result in meaningful solutions to your tax problem. A consultant who can also represent you through whichever program you choose.

The April 30th tax deadline is approaching; don’t let another tax year pass you by, call DebtCare Canada at 888-890-0888.

Monday, 18 April 2011

Income Tax Evasion in Canada - It is NOT Illegal to Have a Tax Debt

Poor accounting practices, procrastination, failed businesses and major life changes are just a few of the causes of income tax debt. Fear will inevitably set in as time passes and you will continue to fall further behind in filling your returns. Coming clean becomes harder to face as you realize what you are going to owe and the stark reality that the Canada Revenue Agency is going to come after the money.

The Canada Revenue Agency is known for taking aggressive collection action against those who owe them money. Not declaring income or failing to file your tax returns is far more daunting than most realize. Here is why:
1. Not declaring your income is income tax evasion in Canada
2. Not filing your income tax returns is tax evasion in Canada

There is no question that owing money to the Canada Revenue Agency can be financially devastating; however the simple fact is that it is not illegal to have a tax debt. With that in mind, what would be the next logical step if you haven’t filed your tax returns in many years? Act now, do not keep ignoring the problem.

Once you have filed your tax returns, declared all income, and your tax debt has been assessed, you may still realize that satisfying the Canada Revenue Agency is no easy task. They can be difficult by demanding payment in full and adding interest and penalties or not accepting a monthly payment plan. In this case, what you are dealing with is a financial problem.

If you know/agree that you owe the money and there is no way you can pay in full, do not let fear lead you to expensive tax lawyers or trustees in bankruptcy.

A tax lawyer may charge you thousands of dollars to devise a payment plan with the Canada Revenue Agency.

A trustee in bankruptcy represents not only the person filing for bankruptcy, but ALSO the Canada Revenue Agency and the individuals other creditors. Directly providing your personal financial information to a bankruptcy trustee would be akin to handing it directly to the Canada Revenue Agency. While the bankruptcy trustee may offer great services to get you to sign, they will be the first one to come after you on behalf of the Canada Revenue Agency. Keep in mind that they are compensated based on the amount of the settlement they negotiate. Simply put, if they get the Canada Revenue Agency a larger settlement (you pay more), they will, in turn, earn more money.

An accountant may not be the solution if the problem has gone too far. More often than not accountants don’t know how to effectively negotiate for taxpayers who have a significant tax/financial problem.

Where do you turn if you owe the money and cannot pay?

There are Federal Government programs available to individuals in financial crisis. A good financial consultant can review your specific tax debt, and explain all of the options that are available to you. This includes government programs that will protect you from the Canada Revenue Agency. For more information call 888-890-0888 or visit www.debtcare.ca.

Tuesday, 12 April 2011

Stop a Wage Garnishment without Hiring a Lawyer

A “Wage Garnishment” is when a party obtains the legal authority to order your employer to deduct and forward to him a portion of your wages. Truth be told, thousands of Canadians have their wages garnished each year for a variety of reasons.

Let’s explore some of the most common types of wage garnishments:

Court Ordered Wage Garnishments. This is when a creditor or another party files a Claim either in Small Claims Court (small amounts of money) or Superior Court (larger amounts of money). Upon obtaining a judgement in their favour, they can then proceed to collect their money through the court ordered wage garnishment.

Canada Revenue Agency Wage Garnishments. If you have a tax debt, the Canada Revenue Agency can impose a garnishment on your wages of up to 50% of your earnings and up to 100% of any secondary income. The Canadian Income Tax Act enables the Canada Revenue Agency to garnish your wages without obtaining a court ordered judgement against you. This type of garnishment is often swift and will occur with little warning.

Family Responsibility Garnishments. Wage garnishments that result from unpaid family responsibility can involve a garnishment of up to 50% of your wages and can only be removed by Court Order; not even bankruptcy can stop a wage garnishment resulting from unpaid child support.

If you fall into the first two groups, the first thing you have to determine is, do you in fact owe the money? If the answer is yes, then what you have is a financial problem. At this point it would be against your best interests to spend thousands of dollars on lawyers to stop a wage garnishment.

If you have unpaid debt that was caused by a financial problem, a wage garnishment will only intensify this issue and it could make it impossible to pay your basic living expenses. There is good news: you have choices that don’t involve expensive lawyers and bankruptcy trustees.

The Federal Government has programs in place to help individuals that are suffering due to financial hardship. The fastest way to stop a wage garnishment is to take advantage of one of these programs. A problem as significant and severe as a garnishment is cause for concern. The problem is, a lawyer will sell you legal services, a trustee will sell you bankruptcy services, and a bank will be offer you credit products. What you really need is sound financial advice, from an unbiased professional.

the end of the day, there is great value in retaining a financial consultant. One who can educate you about the available Government Programs and other options that are put in place to stop the garnishment of your wages. A professional financial consultant who will guide you through every step of the way. A financial expert, hired by you, to protect your best interests. If your wages are being garnished, stop being garnished now! Call DebtCare Canada at 888-890-0888 or visit http://www.debtcare.ca/.