The June 15 deadline for self-employed individuals to file their 2018 tax return has come and gone. And if you don’t have the funds to pay your tax bill you are probably wondering what can be done.
If you owe taxes and are struggling to come up with the funds to pay the Canada Revenue Agency (“CRA”) you need to speak with us right away. Don’t delay.
There are debt advisors out there who state that they can “settle” or “reduce” a tax debt with Canada Revenue Agency. If it sounds too good to be true, then it probably is.
They don’t “negotiate” and they don’t “settle” tax debts. CRA is not your typical creditor. They didn’t choose to lend you money and become a creditor. They become a creditor by virtue of the self reporting tax system we have. And they want to be paid. In full.
They are not business people in the traditional sense. Collectors have no authority to settle or reduce a tax debt save and except for circumstances governed by the Income Tax Act or the Bankruptcy and Insolvency Act.
They also have extraordinary powers. This would include issuing garnishees to banks, investment sources, and to your customers. They file liens and writs on a daily basis.
CRA uses a number of methods to try and collect the tax debt:
Firstly, CRA collections will demand payment. If you pay, all further action stops. If you don’t pay, the collection action gets stepped up a notch. There is no negotiation over how much you owe. The collector has no authority to do that.
If you fail to pay, the agent assigned to your case will begin contacting you to try and find out as much as they can about you.
Once you have engaged in a dialogue, the agent may try to negotiate with you if you provide further information. They may offer to consider a payment plan. They will provide you with a financial disclosure form asking you to disclose where you live, work, bank, monthly income and expenses, debts, and assets.
Payment plans are based on essentially two things;
- Income available over and above basic household needs or in the case of a business, monthly operating costs.
- Your ability to borrow or liquidate assets to satisfy the debt.
Lastly, if you can’t make the payment, for whatever reason, the CRA collections department will take action. Remember that financial disclosure form? It now proves very handy for that agent:
- Your banking information will be used to freeze your account;
- Your employment information will be used to garnish your wages;
- Your housing information will be used to place a lien on your home.
So when you hear debt advisors saying they can settle the debt. Be careful.
So, the best way to meet that debt head on is to take control. Licensed Insolvency Trustees are the go to professionals of choice when dealing with debt. We are mandated to explain all of your options to you.
The experienced professionals at Boale, Wood & Company Ltd. understand the stress that financial difficulty can cause.
We know that realizing that you are experiencing financial problems is a hard thing to do for most people and sometimes you feel helpless. But instead of feeling helpless, let us help you gain control of your debts and understand your options.
Start by scheduling a meeting with us to discuss the solution best suited to your situation. This meeting is free and there is no pressure or obligation for you to make a decision right away.
We have the expertise to find the solution best suited to you.
Call us, it’s not too late. (604) 605-3335.