The 2017-2018 Canadian tax deadline is just around the corner — which might be a source of stress if you’re worried about CRA collections.
CRA collections can lead to severe financial consequences. CRA can pursue someone criminally, but they usually rely on penalties, interest, and collection action — such as wage garnishments — instead.
If you’re behind on filing tax returns, owe a tax debt, or know you’ll owe this year and can’t pay, it might be tempting to ignore the problem, but that will only give CRA the power to enforce its collections. Here’s what you can do instead.
- Don’t Delay Filing Your 2017-2018 Taxes
The best way to keep CRA off your back is to not give them a reason to go after you. There is a difference between having a tax debt and tax evasion. Tax evasion has criminal consequences and can come from failing to file and report income. But you can’t be prosecuted for having a tax debt. What does that mean? Even if you will owe, it’s better to file your return than ignoring the problem.
- You Will Owe a Tax Debt, But Can’t Pay…
Let’s say you’ve filed your tax return because you know it’s better not to delay, but you’re still going to owe a tax debt, and you already know you can’t make the payment. This could invite CRA collections. So, what can you do? CRA won’t make a settlement directly with you, but they may consider temporary short-term payment plans for you to repay. CRA will likely require full financial disclosure. At this point, you may want to consult with a financial professional who specializes in tax debt.
- Get Help
If you will owe a tax debt that you can’t pay, or if you have outstanding tax returns that you haven’t filed, consult with a financial professional immediately.
CRA will not usually agree to reduce your tax debt. Other than obtaining an order from a judge in tax court, only a Licensed Insolvency Trustee is licensed to help you to take formal steps to reduce or eliminate the principal amount owed to CRA associated to a tax debt. They will look at your situation and give you free, honest advice regarding your options. .
If you’re worried about CRA collections or need tax advice, the Licensed Insolvency Trustees at Fuller Landau Debt Solutions can help. They take a personal approach to debt management. Call today to schedule a free consultation: (416) 927-7200.