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Tax Debt and the CRA

As they say, the only things we can truly count on are death and taxes. So, it’s not uncommon to come across clients who, for one reason or another, haven’t been able to meet their obligations to the CRA.

• Employees who have not been taxed at source or who have been paid under the table, and may not have set aside enough money to pay their debt at the end of the year • Employers who have deducted some taxes, but not enough to meet the employee’s marginal tax rate • Tax returns that were completed inaccurately so that the amount paid is not reflective of the amount owing • Unfiled tax returns or unpaid tax debts

Regardless of the cause, if you owe money to the CRA, they will collect – one way or another.

Dealing With the CRA Head On

If you are receiving calls and letters from the CRA, don’t avoid them.  It seems like the easiest thing to do at the time, but these collection strategies will simply escalate until they receive their due.  The truth is, the CRA is pretty reasonable to deal with as long as you are honest and forthright.  They are usually willing to work out a payment arrangement, and as long as you keep up your end of the deal, are pretty flexible about giving you options to pay off your debt.

Seizure of Assets

If you haven’t responded to the CRA’s requests, they will likely attempt to recover your tax debt by freezing your bank account.  The bank is required to comply with their request and will not release your funds to you until you have reached out to the CRA and made an appropriate arrangement for repayment.

Another strategy that may be used by the Canada Revenue Agency is to issue a Requirement to Pay to your employer.  This is similar to a garnishment of wages, where your payroll department would direct up to 30% of your wages directly to the CRA to satisfy your debt.  Again, you can speak to the agent on your file and see if you can work out a payment schedule to limit your employer’s involvement.

Get Professional Help

Dealing with the CRA can be nerve wracking for many people.  A Licenced Insolvency Trustee can help you to come up with the best plan for your tax debt and assist with your overall financial health as well.  We can walk you through your options and give you solid financial advice to help you plan for the future.  There are solutions to resolving your debt

Let the friendly professionals at D. Thode & Associates help you find the right options for you.  

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