With the advent of May, the personal tax filing deadline is now well behind us, and for many, a sigh of relief can be had. For others however, the passing of the deadline brings with it a whole new set of issues. If, after filing your taxes, you find yourself with a tax debt that has led to wages being garnished by the Canada Revenue Agency (CRA), this first blog in our wage garnishment blog series might be a smart place to start as far as finding relief.
If you have yet to have your wages garnished by CRA, but are concerned that this might be a reality in the very near future, here are some things to think about:
· If you are an employee on payroll with taxes deducted at the source, the CRA can garnish up to 50% of your wages. They simply need to send notice to your employer and your employer is legally required to submit a portion of your pay to them to pay off your tax debt.
· If you are a sub-contractor, or receive a different form of income, such as a pension, the CRA can garnish up to 100%.
· If you are self-employed, the CRA will send a notice to your customers to redirect your receivables directly to the CRA.
· A court order is not required for wage garnishments initiated by the CRA.
· If the person who receives the requirement to garnish your wages does not comply, the CRA can then pursue them (so don’t assume that just because your employer likes you that they will ignore a requirement to pay).
How does the CRA know where to turn to garnish your wages? There are a number of different sources, including the T4 filed by your employer, an audit done on a client or supplier, a call to the CRA tip line, or personal disclosure.
A garnishment can cause serious financial hardship, not to mention embarrassment or negative impacts to your personal business. Knowing this, what can you do to prepare yourself, or deal with a wage garnishment by CRA that is already in place? Remember that dealing directly with the CRA is never a good idea – unless you can pay the debt in full, your chances of getting an agent to even entertain a reasonable payment plan are slim to none. And, if you attempt to deal with them directly, providing additional information in the hopes of reaching an amicable agreement, a frozen bank account or property lien may be the only result.
There are programs that offer immediate protection from wage garnishments by the CRA, as well as other enforcement action, and finding out about these is the best place to start.
If you are facing a tax debt or a CRA wage garnishment, DebtCare can help. Call us today at 1-888-890-0888.