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Category: Tax Deadline

  • New 2020 Income Tax Deadline: What This Means for You

    Normally, at this time of year, we would be reminding Canadians to have their income taxes filed by April 30. However, 2020 is a very different year — with a very different income tax deadline.

    Due to the novel coronavirus (COVID-19) pandemic, the Canadian government has extended the income tax deadline for the 2019/2020 year.

    Here’s what that means for you.

    New Income Tax Deadlines

    The new deadlines for 2020 are:

    For individuals:

    • Filing date for 2019 tax year: June 1, 2020 (extended from April 30, 2020)
    • Payment date for 2019 tax year: September 1, 2020 (extended from April 30, 2020)

    For self-employed:

    • Self-employed tax filing deadline: June 15, 2020 (unchanged)
    • Self-employed payment date for 2019 tax year: September 1, 2020 (extended from April 30)

    For corporations:

    • Filing date for current tax year: June 1, 2020 (applies to corporations that would otherwise have a filing due date after March 18 and before June 1, 2020)
    • Payment date for current tax year: September 1, 2020 (applies to balances and instalments under Part 1 of the Income Tax Act due on or after March 18 and before September 1, 2020)

    See the full list of updated filing deadlines and payment dates on the Canada Revenue Agency (CRA) website: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html

    Late-Filing Penalties and Interest

    While the income tax deadlines and payment dates are set, the CRA has also offered some relief for those who are unable to file a return or make a payment by the deadlines because of COVID-19. Taxpayers can request the cancellation of penalty and interest charged to their account, the CRA says.

    “Penalties and interest will not be charged if the new deadlines that the government has announced to tax-filing and payments are met,” the CRA states.

    What Does This Mean for You?

    • More time to file your income tax return and make your payment.
    • However, the return will still need to be filed on time.
    • Although taxpayers can request the cancellation of penalties and interest charged to their accounts, that is only if you meet the deadlines — so don’t delay filing.
    • If you owe, the principal amount will still need to be paid by September 1. If you cannot pay, start thinking about your options sooner rather than later.

    Although the income tax deadlines have been extended and there is some relief available, taxes owed have not been waived. This means that you will need to pay what you owe in full — ideally by the payment deadline of September 1.

    If you will not be able to pay by September 1, don’t ignore the situation. Instead, take action now by seeking out debt help. A debt counsellor, like DebtCare Canada, will help you make a plan to deal with your income tax during the COVID-19 pandemic and beyond.

    We can also help resolve a CRA back tax problem if you are sitting on past due returns that weren’t filed because you owe and can’t pay.

    Don’t delay. Get in touch today before the Canadian income tax deadline to go over your options. We are fully functional 100% remotely during the COVID-19 pandemic. Call or text “Help” to 1-888-890-0888 or visit www.debtcare.ca.

  • COVID-19 Income and Debt Help for Canadians

    The past two weeks have been a non-stop train of breaking news as Canada copes with the novel coronavirus, COVID-19.

    This public health pandemic is affecting many across the country — both medically and financially.

    In order to “flatten the curve” and reduce the risk of infection, many businesses and public services have been suspended, including in some provinces:

    • Public and private school closures.
    • Daycare closures.
    • Eat-in restaurant closures (take-out and delivery are still available).
    • Temporary closure of non-essential businesses, such as clothing retailers.
    • Temporary closure of public event spaces, such as movie theatres.
    • The list goes on…

    While all of these measures are meant to reduce COVID-19 risk and pressure on our healthcare systems, it has created another challenge: financial difficulties.

    Many Canadians are now out of work, or unable to work due to the need for childcare or caring for those who are ill. While some are working from home, not everyone has that opportunity.

    Businesses are also feeling the loss of income, and some have had to lay off employees temporarily.

    While public safety is essential, there is no denying the challenge this has had on the Canadian economy — and that’s where emergency relief comes in.

    Emergency Response Package

    On March 18, 2020, Prime Minister Justin Trudeau announced an economic aid package of $82 billion. This includes:

    • A temporary boost to Canada Child Benefit payments.
    • A new Emergency Care Benefit of up to $900 biweekly, up to 15 weeks, to provide income support to workers who have to stay home and don’t qualify for paid sick leave or employment insurance (EI). This includes those who are self-employed.
    • A new Emergency Support Benefit to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.
    • A six-month, interest-free reprieve on student loan payments.
    • The income tax deadline has been extended to June 1, 2020 and taxpayers can defer tax payments until August 31.
    • And more.

    Mortgage Payments Deferrals

    The Big 6 Banks announced on March 17 and 18 that they are taking measures to support customers on a case-by-case basis to provide solutions, including up to a six-month payment deferral for mortgages and the opportunity for relief on other credit products.

    This is meant to help those who are facing challenges due to COVID-19, such as pay disruption, childcare disruption, or illness.

    Customers are encouraged to reach out to their lenders to ask what assistance there is for them.

    Bank of Canada Interest Rate

    On March 13, 2020, the Bank of Canada announced an emergency interest rate cut to 0.75% — the lowest that it has been since 2017.

    “It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” the Bank said.

    The next Canadian interest rate announcement is scheduled for April 15, 2020. Economists are predicting the interest rate will be cut again.

    The lower interest rate means that credit is easier to secure — and is especially helpful for variable-rate debts, such as variable-rate mortgages, credit cards, or unsecured lines of credit.

    Putting It All Together — and Dealing with Debt

    Let’s talk for a moment about the impact of all of this. While these are good measures temporarily, we must acknowledge that they are not necessarily long-term solutions.

    For people relying on a certain amount of income to meet their bills, $900 biweekly is likely not enough to cover their expenses.

    And then there is the matter of deferrals — whether that be deferring mortgage payments, student loans, income tax payment, or otherwise.

    These payments will still need to be made eventually. Some of the details have yet to be confirmed, but consumers need to be aware that these payments are not just disappearing. These methods are meant to give you time to get the money together, when hopefully the economy is recovered, along with public health.

    But (and there is a big but) the money will still be owed. You will still need to find the funds.

    If you are currently earning less than you usually make due to COVID-19, or have a hard time meeting your bills regardless, other measures may need to be taken to get your finances on track.

    These might include:

    • Creating a budget and tracking expenses.
    • Avoiding taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.
    • Filing for insolvencies, such as bankruptcy or consumer proposal.

    Take the time now to make a plan for your finances during the COVID-19 pandemic. If you are on the brink, contact a debt counsellor today.

    Debt can weigh down your lifestyle, particularly when money is tight. If you have $10,000 in credit card debt, those payments can take away from your ability to pay the mortgage or rent, buy groceries, or pay utility bills. When every dollar counts, you don’t want any more than necessary going towards your debt payment.

    At DebtCare Canada, we remain available by phone, text, or online across the country. We will talk through your financial options with you and help you find the best path forward for your unique situation during the COVID-19 pandemic or otherwise.

    Contact us for a free consultation. Call or text “Help” to 1-888-890-0888 or visit www.debtcare.ca.

  • 2019 Tax Deadline Around the Corner – Let’s Review Current Penalties and Interest

    The Canada Revenue Agency (CRA) tax deadline for the 2019 tax year is coming up quickly. Are you prepared?

    The deadline to file your 2019 income tax is April 30, 2020.

    For self-employed tax filers, the deadline is June 15, 2020, however, it’s better to file by April 30 as you will be charged interest from May 1 to June 15.

    It’s critical to meet the CRA filing deadline to avoid late-filing penalties, interest, and collection action — even if you can’t pay.

    Here’s what you need to know about the 2019 tax filing deadline:

    CRA Interest

    One reason why you want to file on time and pay what you owe in full (or look into alternative options) is to avoid CRA interest charges.

    If you have a balance owing for 2019 and don’t pay it in full, the CRA can begin charging you daily compound interest on May 1, 2020. This includes any balance owing if the CRA reassesses your return.

    If you are charged penalties, such as a late-filing penalty, the CRA can also charge interest on this amount.

    If you have amounts owing from previous years, the CRA will continue to charge daily compound interest on those, too.

    CRA interest rates change every three months.

    CRA Late-Filing Penalty

    If you owe money to the CRA and miss the tax filing deadline of April 30, 2020 (or June 15, 2020 for sole proprietors) you can be charged a late-filing penalty.

    In 2019, this penalty was 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, up to a maximum of 12 months.

    If you’ve been charged a late-filing penalty in the past three years, you could be charged even more for missing the April 30, 2020 deadline — 10% of your balance owing, plus 2% of your balance for each full month your return is late, up to a maximum of 20 months.

    This is why, even if you can’t pay your full balance, it’s still best to file your return on time.

    Repeated Failure to Report Income Penalty

    If you failed to report an amount on your return for the 2019 tax year and you also failed to report an amount on your return for 2016, 2017, or 2018, you may be charged a repeated failure to report income penalty.

    If you did not report an amount of income of $500 or more for a tax year, it will be considered a failure to report income.

    The federal and provincial or territorial penalties are each equal to the lesser of:

    • 10% of the amount you failed to report on your return for 2019.
    • 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.

    In some cases, if you voluntarily tell the CRA about an amount you failed to report, the CRA may waive these penalties. However, if you choose to go this route it is better to do so with an advocate on your side (like DebtCare!).

    False Statements or Omissions Penalty

    If you knowingly make a false statement or omission, or do so through gross negligence, you could be charged a penalty equal to the greater of:

    • $100
    • 50% of the understated tax and/or the overstated credits

    Again, in some cases, you can voluntarily tell the CRA about a false statement or omission and have the penalty waived. Again, it’s best to consult a debt counsellor first, such as DebtCare, before negotiating with the CRA.

    What To Do If You Owe Taxes But Can’t Pay

    As we’ve mentioned, if you know you will owe but can’t pay, it’s still important to file before the April 30, 2020 tax deadline.

    Don’t just hope that it will be overlooked or go away on its own – it won’t, and you’ll end up accruing more interest and penalties. In some cases, the CRA will waive the penalties or interest, but you will still owe the principal amount.

    Instead, make a plan for how you will pay what you owe.

    This could look like:

    • Making room in your budget to find the amount owing.
    • Taking out a personal loan that you can repay over a longer period and using the money to pay the CRA.
    • Consolidating debt.
    • Refinancing your mortgage.
    • And more.

    If you truly cannot pay, nor can you access a personal or debt consolidation loan, you can stop CRA collection action by filing for bankruptcy or for a consumer proposal.

    Get A Head Start By Contacting a Debt Counsellor

    At DebtCare Canada, we provide access to one of the only programs that can resolve a CRA back tax problem.

    Whether it’s personal income tax, HST, or payroll, DebtCare Canada can help! Get ahead of your tax problem. Reach out to us for a free consultation by calling 1-888-890-0888 or learn more about our CRA Tax Debt program at https://debtcare.ca/back-taxes/.

  • CRA Auditing PayPal Business Recipients — What to Do If They Have Come After You

    Business owners, have you received income using PayPal? If so, the Canada Revenue Agency (CRA) may be contacting you for an audit.

    In November of 2017, PayPal was served with a Federal Court of Canada order to submit specific information to the CRA about PayPal Business account holders.

    PayPal had to give the CRA account details for businesses that sent or received payment via the service between January 1, 2014 and November 10, 2017.

    What does this mean for you?

    • If you’re a business that doesn’t use PayPal, you won’t be affected.
    • If you’re a business that has a PayPal Business account and used it for transactions between the above dates, you might be facing an audit.

    With the information from PayPal, the CRA is looking for business income that was not reported in annual filings.

    If you reported all of your income, including any from PayPal, and can prove it, then the audit would proceed as normal.

    But what if you received income via PayPal, but didn’t report it? That’s a different matter.

    If your business is audited and you know that you will owe, then you need to get a financial plan in place. Don’t ignore the problem!

    The CRA cares less about the fact that you didn’t report all of your income and more about closing their file. They can’t close their file if they don’t collect from you.

    If they can’t collect from you, they will turn to collection action – like a frozen bank account or issuing requirement to pay notices to your clients. This is why it’s best not to ignore the situation.

    Having a plan means putting measures in place to protect yourself once the debt is determined. One of the most important measures is figuring out how you will pay what you owe – or what you will do if you cannot pay.

    How to pay the CRA what you owe and stop collection action:

    • Pay the amount in full if you have the funds available.

    If you don’t have the funds available…

    In general, it is better to owe another financial agency than it is to owe the CRA. The CRA can take swift collection action with devastating consequences – and they are not required to give you notice.

    • If possible, consider taking out a loan to pay the CRA what you owe. Then pay back the other loan over a fixed schedule.
    • If you can’t take out a loan, can you refinance your mortgage?

    If you can’t take out a loan, refinance, or otherwise find the funds…

    • Negotiate with the CRA. In some cases, the CRA will agree to a payment schedule with you. However, this is a risky move and could further expose your business to collection action. And even in the best-case scenario, you will still owe the CRA – they will want their payment in full.
    • Part of their negotiation plan may still be to collect – such as sending out requirement to pay notices to business clients, which could harm your reputation.

    If negotiation isn’t viable…

    • File for a consumer proposal or bankruptcy.

    If you can’t pay in full, find the funds, or make an agreement, filing for insolvency will immediately stop CRA collection action. For many businesses, this is a far preferable alternative than having the CRA issue requirement to pay notices or freezing your bank account.

    The Bottom Line

    Whether your business is being audited by the CRA for a PayPal Business account or another reason, if you are found to owe and you can’t pay, you need a plan.

    Ignoring it won’t make the problem go away – and, in fact, will make it worse through collection action that can harm your finances and your reputation.

    When dealing with the CRA, it’s best to have an advocate on your side. At DebtCare Canada, we’ve helped thousands of Canadians deal with problem debt, including CRA tax debt. We offer access to one of the only programs that can resolve a CRA back tax problem.

    Contact us today to make a plan for your CRA business audit. Call 1-888-890-0888 or visit https://debtcare.ca/back-taxes/.

  • CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself Before It’s Too Late!

    If you own, or are a director for, a company and accept trust money for the federal or provincial governments, you could be subject to CRA director’s liability.

    CRA Director Liability

    CRA director liability means that the Canada Revenue Agency (CRA) can decide that you owe a tax debt for your business – personally.

    Like anything, director’s liability is a process and there are ways that you can protect yourself if you’re assessed.

    Here’s what you need to know.

    What is CRA Director’s Liability?

    In Canada, incorporated businesses are considered separate legal entities from the owners’ personal assets and liabilities. If any debt is accrued by the incorporated business, the employees, officers, and directors are not held personally liable.

    However, this isn’t always the case – also known as director’s liability.

    If the CRA can’t collect an amount owing from the business directly, it may enforce director’s liability and assess the director, or directors, personally. This is most common with unremitted GST/HST trust money or unpaid payroll source deductions.

    What Happens if You Receive a Director’s Liability Assessment?

    If you are subject to director’s liability and can’t pay, the CRA might place liens on your assets, freeze your bank account, garnish wages, and more. And they can do this even if the corporation is no longer operating.

    If you are, or ever have been, the director of a corporation with a CRA tax problem, you need to act fast.

    How to Protect Yourself

    1. Do your due diligence.

    In the event that you are the subject of a director’s liability assessment, paperwork is your ally.

    If you can prove that you made your best efforts to have the corporation pay the GST/HST remittance or other deduction, then you may have a chance of having it overturned.

    According to Mondaq:

    “There is also a “due diligence” defence available to taxpayers who are assessed for CRA director liability by Revenue Canada. Subsections 227.1(3) of the Income Tax Act and 323(3) of the Excise Tax Act contain identical wording which states that a director is not liable for a corporation’s failure to collect GST/HST or Payroll Source Deductions if they “exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances”.

    However, this solution will likely require a tax lawyer and could end up costing more – especially if the circumstances cannot be proven.

    2. Make note of your resignation date.

    If you’ve resigned from the corporation, or are planning to resign, make sure the date is well-documented. This is because, in many cases, there has been a precedent set of a two-year limitation period.

    According to Lerners, many of the statutes that impose liability on a director have a two-year limitation period. For example, a claim for unpaid wages against a director under the Employment Standards Act, a claim for which there is no due diligence defence, cannot be made more than two years after a director resigns.

    However, if a director resigns on paper but continues to act like a director, then the two-year time limit is void. In addition, the resignation needs to be clearly stated. Lerners recommends being on the public record with your resignation and its effective date.

    “When government officials are considering an assessment against a director, the first place they check is the public record,” Lerners notes. “You do not want to be in the position where you receive a letter proposing to assess you personally when you resigned years before, but your resignation was never properly noted on the public record.”

    Again, this solution would most likely require a tax lawyer.

    3. Find solutions for the tax debt.

    There may be an event where you are being assessed for director’s liability and cannot afford to work with a tax lawyer or don’t have a defense available.

    In these cases, a CRA director liability assessment can be dealt with in the same ways as personal tax assessments: by making a plan for the debt.

    The CRA wants their money and you may have to pay it – so the solution becomes finding a way to raise the funds. This might include:

    • Taking out a secured loan.
    • Accessing home equity.
    • Insolvency options, like filing for a consumer proposal or personal bankruptcy.

    If you owe a director’s liability and know that you can’t pay it all, even if you use home equity or a loan, insolvency filing options may be the answer. When you file for a consumer proposal or personal bankruptcy, your unsecured debts — including tax debt — are included.

    This is the only way, besides paying the debt in full, to stop CRA collection action, such as requirements to pay, frozen bank accounts, and liens against your assets.

    Whether you decide to pursue litigation or deal with the CRA director liability tax debt directly, DebtCare Canada can help. We’ll go through your options and find the best way to stay protected.

    Do you have a CRA director liability, call 1-888-890-0888 or visit www.debtcare.ca for a free consultation.

  • Missed the Tax Deadline? Read Our Complete Guide to CRA Penalties and Interest

    The 2018 personal tax filing deadline was April 30, 2018. Seeing as we’re now in August, if you missed it and you owe money, you’ve likely racked up Canada Revenue Agency (CRA) penalties and interest by now.

    Late-Filing Penalties and Interest

    According to the CRA, late-filing penalties and daily compound interest start accumulating on May 1, 2018 for any unpaid amounts owing for 2017. You could be charged:

    • 5%of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • 10% of your 2017 balance owing, plus 2% of your 2017 balance owing for each full month your return is late, up to a maximum of 20 months, if you’ve been charged a late-filing penalty on your return for 2014, 2015, or 2016.

    The above amounts are what you could be charged after filing your tax return late. However, if you decided to not file at all, the consequences could be even worse.

    Failure to Report Income Penalty

    If you fail to report an amount on your return for 2017, and you also failed to report for 2014, 2015, or 2016, you may have to pay a federal and provincial/territorial repeated failure to report income penalty.

    Any amount of income of $500 or more that was not reported is considered a failure to report income.

    These penalties are each equal to the lesser of:

    • 10% of the amount you failed to report on your return for 2017; and
    • 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.

    False Statements, Omissions, and Gross Negligence

    If you make a false statement or omission on your 2017 tax filing, you could be charged an additional penalty:

    • $100; and
    • 50% of the understated tax and/or the overstated credits related to the false statement or omission.

    This penalty can be charged whether you knew about the false statement, or if it is caused by “gross negligence,” for instance if you paid somebody else to file your return for you (like an accountant) and they made an error. Even if you pay somebody else, you are still responsible for the accuracy of your return.

    CRA Collections

    If you fail to pay an amount owing on your tax return, the CRA can begin collection action. This can be financially devastating, and publicly embarrassing. Common collection action includes a wage garnishment, a frozen bank account or putting liens on your assets.

    The CRA can begin collections without warning and without a court order. Once a collection action is in place, it becomes even harder to negotiate with the CRA. If the CRA has started collection action, time is not on your side. The only two things that can force a CRA collection action to stop (besides paying the debt in full) are filing for a consumer proposal or filing for bankruptcy.

    What to Do

    If you’re reading this blog, it’s possible that you’re several months behind on filing your tax return, or you haven’t yet paid back the amount you do owe. If this is the case, you don’t want to delay it any longer — that will just result in even more charges, CRA collections, and potential court action for tax evasion. But you don’t have to go it alone.

    You need an expert that can look at your whole financial picture and put together a plan that will work for you.

    At DebtCare Canada, we can help with your tax debt, whether it’s personal income tax, HST, or payroll. We provide access to one of the only programs that can resolve a CRA back tax problem.

    Contact us today for a free consultation. Call 1-888-890-0888.

  • HST Input Tax Credit Alert: If You’re Behind Filing, 4 Years is Your Limit

    debt11If you own your own business, you know that your HST input tax credit can be a valuable resource financially. As a GST/HST registrant, the ability to recover the GST/HST you paid or owe on purchases and expenses related to your commercial activities by claiming input tax credits can be a big help, especially when you owe a tax debt.

    That being said, many business owners fall behind filing their HST returns for a variety of reasons, most often disorganization, lost receipts, or even the knowledge that a debt will be owed and the funds to pay are unavailable.

    What most business owners are unaware of, however, is that after 4 years you can’t claim input tax credits. Since these can reduce your overall tax debt, it is important to file within this limited timeframe to reap the benefits of this resource.

    As mentioned, one of the most common reasons individuals hold off claiming the HST input tax credit is because they know they will have to pay. If you are in this position, and are worried that even if you take into account input tax credits, you still can’t pay, then you have to look at the other options available for payment.

    Why not just leave it unfiled? Well, HST is trust money so the Canada Revenue Agency is that much more aggressive when it comes to collecting. They will want to be paid in full right away, or over a very short term.

    What you can do:

    Do you have the ability to pay in full, or over a 6-month term? If so, then you don’t have a problem. Negotiate a payment plan and wipe the debt clean.

    Do you own a home with equity? If so, perhaps using that equity to refinance and get a mortgage to pay the tax debt makes the most sense. A second mortgage, structured more like a loan than a mortgage with an amortization period of 20-25 years, can mean a small monthly payment that settles the debt and gets the CRA off your back.

    However, if the answer to these questions is no, you may want to talk to a financial counsellor about government programs that you can leverage to protect yourself from CRA enforcement while they negotiate a payment arrangement you can afford.

    At DebtCare, we have the knowledge and experience that makes settling that debt simple.

    Want to discuss all of your options? Call us today at 1-888-890-0888.

     

  • Missed the 2015 Tax Deadline – Here is what to expect next

    debt1April showers have brought May flowers…but if you missed the 2015 tax deadline this month may also bring with it a tax debt, accompanied by penalties and interest. When it comes to penalizing Canadians for late filing, the Canada Revenue Agency doesn’t fool around – and you shouldn’t either.

    In Canada, the 2015 tax deadline was April 30th, and if you, like many others, missed it, here is what you can expect:

    • If you owe for 2015 and didn’t file on time, you can expect to be charged a late-filing penalty of 5% of your balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • Additionally, if you missed the deadline and were charged a late-filing penalty on your return for 2012, 2013, or 2014, your late-filing penalty for 2015 may be 10% of your 2015 balance owing, plus 2% of your 2015 balance owing for each full month your return is late, to a maximum of 20 months.

    Once penalties are leveraged, they will continue to accumulate and then interest is added to the debt and the penalties. You can also expect, once that assessment arrives in the mail, to start receiving notices to file your returns and pay the debt.

    Not filing is not an option. If you choose not to file, you can be pursued for tax evasion and the CRA can arbitrarily assess you. This is done by looking at your current occupation and making an income estimate based on the industry standard. If you are assessed a debt based on the income the CRA thinks you earned, penalties and interest will also be applied.

    So you file, but still don’t pay the debt. The next step the CRA will take is to levy collection action, which may include a frozen bank account, a wage garnishment, even a lien on your property.

    When it comes to stopping collection action, or avoiding it altogether, your best bet is to pay the CRA in full. If the amount is not readily available, you may consider refinancing your mortgage or obtaining a personal loan. Another option may be reaching an agreement on repayment, but the CRA is not interested in lengthy terms – it wants to be paid back as soon as possible.

    If you can’t pay, and owe enough that you would not reasonably be able to make payments to pay off the debt, in full, in 12 months, move on to plan C – in a situation where you have no assets or you have assets that have no equity, a consumer proposal may be the best option. It will result in a single payment, halted collection action, halted interest accumulation and often is the only way to reduce the principle on a tax debt.

    If you are interested in discussing your options, DebtCare is here to help. We know what the CRA wants to see with regard to repayment or consumer proposal settlements and can help you achieve the best results.

    Call us today at 1 (888) 890-0888.

     

  • Missed the Small Business Tax Deadline? Canadian Tax Penalties, Interest and Options!

    debtRunning a business is tough! Most small business owners are experts in their individual trades, but not necessarily experts in all aspects of business – or other businesses for that matter. For example, you may know how to unclog a toilet, or even install one, but you wouldn’t necessarily want to take on the task of outfitting the plumbing for an entire house. The same is often true when it comes to taxes; many small business owners are well versed in their own finances, but when it comes to their taxes, GST/HST and payroll deductions, etc., this can represent a whole different level of accounting know-how.

    When the small business tax deadline passes, there are always a significant number of individuals who have missed it. Most often, small business owners miss the deadline for 5 reasons:

    1. Unsure of when it was
    2. Procrastinated on hiring someone to come in and prepare the books and returns
    3. Think that money will be owed and are not sure how it will be paid
    4. Missing some type of information, proof of expenses are just one example, and so don’t think that their return can accurately be prepared
    5. Think they will not owe and thus the deadline is more of a guideline…

    If you are a sole proprietor or part of a partnership in Canada, the small business tax deadline was in June. We are now officially past that date, and so, if you have not filed, you’ve missed it.

    If you missed the deadline, the following are the financial penalties:

    • If it is your first time filing late the penalty is up to 5% of the amount owing plus 1% per month for up to 12 months.
    • If you filed late in any of the preceding 3 tax years the penalty is up to 10% of the amount owing and then 2% per month for up to 20 months.
    • Keep in mind that interest is back-dated to the tax year, and accrues on both the principal and penalties!

    If you missed the tax deadline, this is considered tax evasion and you could also be subject to criminal prosecution and further financial penalties. Owing money to CRA is not tax evasion, but failing to file is! One will lead to financial challenges, while the other could land you in court.

    Often, late filing and tax avoidance is due to an underlying financial problem and an inability to pay. If you missed the small business tax deadline the best course of action is:

    Step 1 – Get your books and returns prepared. If you don’t have receipts or other documentation, tell the accountant and they will tell you what you can and cannot include in the return.

    Step 2 – Once the return/returns are prepared you will have a better idea about what you owe and can use the numbers above to estimate penalties. Be realistic about your finances. Consider CRA debt, other debt you have and what assets you want to protect.

    Step 3 – Meet with a financial professional before you file to get a game plan in place for dealing with what you will owe to mitigate the blow-back of collection problems.

    If you are worried about filing late and considering not filing at all because of a looming tax debt, our advice is to file right away to avoid a tax evasion charge, then deal with the debt with professional financial help. Call DebtCare Canada at 1-888-890-0888.

  • Tax Deadline – Have a Plan if You Cannot Pay Before the CRA Knows It

    Tax DeadlineThe tax deadline is fast approaching – the deadline to file your 2013 return, as always, is April 30th – are you ready? Getting your returns in order and filing on time can sometimes be an annual hassle, but it can’t be avoided. Filing online is growing in popularity, and can be done from the comfort of your own home. But what if you miss the deadline – what are the consequences of this?

    If filing taxes seems like a hassle, then dealing with the consequences of missing the tax deadline can seem like a nightmare, especially if you owe. Missing the deadline when you are owed money just means waiting longer to receive it (why would anyone want to do that?), but when you owe money, the Canada Revenue Agency (CRA) won’t wait – and that tax debt will just continue to grow the longer you wait to pay it.

    What are we talking about here? When you owe a tax debt, interest and penalties accumulate at an alarming rate, to the tune of 5% of the total tax debt plus 1% monthly for up to 12 months. Additionally, if you filed late in previous years, your penalty can increase to 10% of the total tax debt plus 2% monthly for up to 20 months. These additional charges are significant, and left unpaid can grow to become larger than the total debt you originally owed.

    Interest and penalties are not the only things that contribute to your tax debt becoming seriously problematic. Once the CRA knows that you owe, they can get pretty aggressive in their attempts to gather the money. Good cop, bad cop tactics to obtain your personal information, collection calls, and enforcement action (wage garnishments, frozen bank accounts) are all realistic and costly outcomes of a missed deadline and failure to pay.

    So, knowing all of this, how can you avoid the irksome effects? If you know that you are going to end up owing money to the CRA it is a smart idea to have a plan in place before they learn about it. Firstly, if you have the ability to pay the debt in full upon filing, great – do that. This will solve the problem before it starts and leave you in a fresh financial position tax-wise. However, if you don’t think you can pay the debt in full, getting a plan in place to do so is a very smart idea.

    For more information about avoiding the consequences of a missed tax deadline please contact DebtCare Canada by calling 1 (888) 890-0888 or visit us online at www.debtcare.ca