One of the scariest
and most serious garnishments of wages that exists is a garnishment of wages
issued by the Canada Revenue Agency. When a tax debt is owed, the Canada
Revenue Agency has a vast arsenal of tools at their disposal that they can
deploy to collect money from you. A wage garnishment is one of these tools.
What you may not
know is that the Canada Revenue Agency does not need to sue you or obtain a
court order against you if they want to impose a garnishment on your wages. The
Canadian Income Tax Act gives them the power to require that your employer
garnish your wages on notice. If you owe the Canada Revenue Agency money,
a garnishment of wages should not be a surprise.
The Canada Revenue
Agency will send out a series of notices before a garnishment of wages occurs:
1. First, you will get a notice that you have a
tax debt.
2. Second, you will get a notice demanding payment
in full.
3. Third, you will get a final notice for payment.
4. Fourth, you will get a notice indicating that
your wages are about to be garnished.
5. Finally, your employer will receive notice to
garnish your wages and remit payment directly to the Canada Revenue Agency.
In a perfect world,
you would immediately begin looking for a solution to deal with your tax debt
before things go so far. Generally people who ignore notices and end up with a
garnishment of their wages simply don’t have the money to pay their debt.
A wage garnishment
can involve up to 100% of your income depending on what type of income you
have. The problem is that once a garnishment of wages
ensues it can cause incredible financial hardship that is difficult to recover
from.
Even if your wages
are currently being garnished and the situation seems hopeless, there are
financial options that can enable you to stop a wage garnishment from the CRA.
Your personal financial situation will have to be thoroughly reviewed by a
professional because the route you choose will depend on your personal
financial circumstances. Solutions can range from:
1. Securing financing to pay the debt or enough of
a lump sum payment that the CRA agrees to lift the garnishment of wages.
2. Participating in a program designed to provide
relief from tax debt which would involve legislated options that can stop a
garnishment even if is being imposed by the government.
Both solutions will
involve the guidance of a financial professional skilled at working with people
who have tax problems and the resources to make a plan to deal with a tax debt
work.
A tax problem is a
very serious one that shouldn’t be taken lightly. If ignored, a tax problem
will only snowball: the debt will grow and the Canada Revenue Agency will only
become more aggressive. If the Canada Revenue Agency garnishes your wages you
may think that it is the extent of the collection action that they are going to
take against you, but this may not be the case. The Canada Revenue Agency has
been known to deploy multiple enforcement measures at the same time to force
you to pay. This could include garnishing your wages and freezing your bank account
or placing a lien on your home.
If you
have a tax debt and are facing a wage garnishment or if your wages are being
garnished, help is just around the corner. Contact DebtCare today at
416-907-2582 or visit www.debtcare.ca. If you have a bank account that
has been frozen by the CRA be sure to check out our article about how to deal
with a frozen bank account.
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