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Can the Canada Revenue Agency Help with Tax Debt?

Making a Deal with Revenue Canada for Owed Taxes

Is it actually possible to make a deal with the Canada Revenue Agency (CRA) for taxes you owe? Successfully negotiating a tax debt settlement with the CRA will depend on a number of different factors, including how much you owe, your ability to pay, and past dealings with the CRA.

Below is a list of things you should know when it comes to dealing with the CRA if you are burdened by upcoming or unpaid taxes.

What if I Don’t Have Enough to Cover My Tax Debt?

If you discover that you owe taxes to the CRA but are not able to pay the balance off in full, you can negotiate with the CRA with regards to payment terms. The best way to do this is to contact the tax consulting specialists at FBC and explain your circumstances. They will try and negotiate a tax payment plan for you with the CRA.

For example, if you owe $1,200 in taxes, you might offer to pay the CRA 12 monthly payments of $100.00. It is up to the CRA to decide if it will accept your offer.

When it comes to tax negotiation, there are two main points to consider:

  1. No matter what deal you make with the CRA, you will be charged interest until your tax debt is paid in full.
  2. If you are unable to reach a payment plan with the CRA, then they may withhold child tax credits and GST credits until the debt is paid. The CRA can also garnish your wages and take money directly from your bank account.

Will the CRA Accept a Tax Debt Settlement?

As a general rule, the CRA does not make deals with taxes owed.  If you have tax debt and know that you will be unable to re-pay it, even on a monthly basis, the only recourse may be through personal bankruptcy or a consumer proposal.

If you file for bankruptcy, all debts for income tax and GST will be legally extinguished. If a consumer proposal is made, all action from the CRA will cease, interest will be frozen, and the penalties may be reduced.

What Is the CRA Taxpayer Relief Program?

Through the CRA Taxpayer Relief program, the CRA may be able to grant relief from penalty or interest to those who can prove extraordinary circumstances are preventing them from paying their taxes.

You can qualify for the CRA Taxpayer Relief Program if you have had a severe medical condition or financial hardship. You can also qualify for the Taxpayer Relief Program if a natural disaster has caused your tax problem.

The Taxpayer Relief Program does not reduce how much you actually owe to the CRA, but it may cancel a portion or all of the interest and penalties.

FBC, Helping Business Owners Solve Their Tax Debt Problems

If you are unable to pay your taxes or GST, it’s important to remember that the CRA does not make deals. You may be able to negotiate a payment plan, but not how much you owe.

The best way to win a tax dispute is to come to the table on an informed basis; you’ll need to have a complete understanding of the Income Tax Act, knowledge of all relevant legislation, and rules. That’s a tall order.

For the last 65 years, the tax experts at FBC have been providing small business owners coast-to-coast with complete tax preparation, accounting, and bookkeeping services. Our tax specialists have helped tens of thousands of Canadians maximize their tax savings and avoid any tax burden pitfalls.

We also make sure all of our small business clients are on the right track. That’s why all new FBC Members receive a comprehensive review of their previous three years’ tax returns.

For more information on how an FBC tax consultant can help your small business prepare and file your annual income taxes, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.