Owing money to the Canada Revenue Agency is by far one of the scariest financial challenges that many Canadian taxpayers face. The Canada Revenue Agency is not an average creditor because they are part of the federal government. They have significant authority with respect to enforcing tax compliance and collecting tax debts.
This authority includes (without a court order or notice to you):
1. Pursuing criminal charges under the Income Tax Act
2. Imposing penalties
3. Imposing interest
4. Notionally assessing your income even when you don’t file a return
5. Garnishing your wages
6. Freezing your bank account
7. Placing a lien on your home
8. Placing a lien on other property
9. Garnishing your company’s receivables, and more….
The Canada Revenue Agency can be ruthless. If you have a tax debt that you can pay, you must be very careful. The Canada Revenue Agency may seem amiable and willing to make a payment plan with you. They will send you a request for financial disclosure. On the financial disclosure you will have to tell them where you live, where you work, provide all sources of income, provide all assets, banking information and more... You may complete this form being open and honest indicating all of your liabilities and payment and then based on what cash flow is left, promise a payment plan.
Once the Canada Revenue Agency receives your financial disclosure they will know all of your assets, where you bank, where you work – you will be completely exposed. Also, when the CRA reviews your budget and sees payments to other creditors like loans and credit cards, they will exclude them from the budget and ask you for significantly more in terms of a monthly payment than you are comfortable with.
This will leave you in the worst position – Who do you pay? What about your credit? What about your family? What about your job? This is how the human aspect of having a tax debt can be sometimes even more impactful than the financial consequences. Many taxpayers suffer with medical problems that stem from stress associated with an inability to pay a tax debt.
Listen, you cannot draw blood from a stone and there are many reasons why Canadian taxpayers find themselves unintentionally in trouble with the Canada Revenue Agency. A good financial consultant can guide you through programs that are available that can stop CRA collections and help you deal with your tax debt. Attempting to negotiate directly with the CRA will often lead to increased exposure so the best thing you can do if you have a tax debt you can't pay is seek professional help.
If you need help with a Canada Revenue Agency tax debt contact DebtCare Canada online or call 888-890-0888.