In 2011, the Canadian household debt to personal disposable income ratio reached 150%. In 1980, it was only 66%. Debt is a growing problem for Canadian's and a result of mismanaging money, not filing taxes, and other financial mishaps.
There were 335 cases and 123 search warrants executed during 2017 for tax evasion. While only 37 convictions were made, they resulted in $10 million in court fines and over 50 years of jail time.
Many of these convictions are made in Canada and very few are tied to off shore accounts.
The Canadian Revenue Agency has been cracking down on tax avoidance in recent years and it's becoming increasingly harder to get away with it. If you've miscalculated your taxes or purposely didn't file them, there are still things you can do to avoid penalties but you must act quickly.
Ahead you will learn about CRA debt forgiveness rules, collections, settlements and more. Get the wait off your shoulders once and for all.
CRA debt forgiveness rules
To lessen the amount of taxes you owe, a consumer proposal has to be sent to the CRA. This can be done through a licensed insolvency trustee .You must follow a specific set of CRA debt forgiveness rules when sending this proposal. These include:
Your previous tax returns have to be filed and updated before you send your consumer proposal.
Any tax returns that are due during the proposal process must be filed when required.
Any taxes you owe during the process must be paid when required.
If your taxes for previous years are re-assessed and a refund is due, the refund has to be applied to Revenue Canada’s outstanding indebtedness.
CRA collections
If you do not pay your taxes on time or are unable to pay, you will be susceptible to collections. A common way they will collect funds is through CRA garnishment. They will contact third parties like your bank, employer, or similar to intercept income. This will then be withdrawn to reduce or pay off your debt.
The CRA can also seize and sell your assets. Anything from your home, car, to personal property can be seized and sold to make up for debt you owe. A court enforcement officer may sell the items through advertising and you will have to pay for any fees that the CRA incurs.
Do you own a company? If so, the CRA has the power to go after directors, partners, or a related corporation. They will be held liable for your debt and it is a common scenario when GST/HST taxes are not paid.
What to do when you owe CRA money
When you owe the CRA money, there are a few options you can take to relieve debt.
The first is to pay the full amount owed. This helps you avoid interest and other legal consequences. You can do this online which is convenient and fast. Payment acn also be maid via mail or at your bank through a remittance slip.
But, not everyone has the money they owe.
The CRA allows you to make payment arrangements. These are smaller amounts that you can pay over time to eventually pay off what you owe. You must first prove that you attempted to reduce expenses or pay off the debt in full before you are able to make payments, though.
If you need help with debt relief, credit consolidation, or similar services, please contact me today for a free 30 minute consultation. I am a Toronto financial consultant that serves the Greater Toronto Area and can help you resolve your financial situation quickly.
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