Tax debt is common for individuals and small business owners. A recent article by the National Post found that the amount of uncollected tax in Canada is expected to hit $13 billion, so if you’re in debt to the Canada Revenue Agency (CRA), you’re definitely not alone.
The most stressful part of owing CRA is the power their collections department is afforded by the government of Canada: they can garnish wages, hold back HST/GST and child tax credits, freeze bank accounts, seize investments and even register a lien on your home. It can be incredibly stressful.
For the last few years, we’ve tackled the issue of tax debt on our blog every spring. Here’s this past year’s post.
Like with student debt, the Government of Canada offers its own relief program for tax debt. This program can reduce the interest and penalty amounts you owe, but not the principal. If you can manage a small reduction in your monthly payments, this would be your best solution.
You’ll need to engage the services of a Licensed Insolvency Trustee (LIT) to do either, but in both cases, your LIT will immediately stop CRA collections from exercising their power.
This is an offer your LIT will bring to CRA that reduces the overall amount of your tax debt in exchange for quicker repayment. Given the shortfall CRA faces on a yearly basis, they’re always more inclined to accept a fairly structured proposal.
If you’re at the end of your financial rope and can’t pay anymore, declaring bankruptcy would be your best option. This will immediately discharge your tax debt, but the downside is the effect it has on your credit score.
Because we’ve been doing it for more than 20 years. Since 1996, we’ve helped people all over Ontario and Quebec get right with CRA. We’ve dealt with almost all the collections agents there, we know what they’ll accept and what they won’t, and once you’re clear, we can help you plan for the future so you never miss a tax payment again.