debtcare.ca

Tag: cra tax debt

  • April Showers Bring May CRA Tax Debt… April 30 is the Income Tax Deadline

    The 2018 Canadian income tax deadline is almost here. On April 30, 2019, all personal taxes must be filed for the 2018 tax year. If you miss this deadline, you will officially be a late filer in the eyes of the Canada Revenue Agency (CRA).

    When you file taxes late, and you owe a balance, not only will you still have to pay the principal tax debt, but you’ll also have to cover interest and penalties. These additional costs can add up quickly.

    In 2019, here’s what you could end up owing:

    Interest

    • The CRA charges compound daily interest starting May 1, 2019, on any unpaid amounts owing for 2018. This includes any balance owing if the CRA reassesses your return. In addition, the CRA will charge you interest on the penalties starting the day after your filing due date. The rate of interest the CRA charges can change every three months.
    • If you have amounts owing from previous years, the CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.

    Late-Filing Penalty

    • If you owe tax for 2018 and you file your return for 2018 after the due date of April 30, 2019, the CRA will charge you a late-filing penalty of 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • If the CRA charged a late-filing penalty on your return for 2015, 2016, or 2017, your late-filing penalty for 2018 may be 10% of your 2018 balance owing, plus 2% of your 2018 balance owing for each full month your return is late, to a maximum of 20 months.

    Repeated Failure to Report Income Penalty

    • If you failed to report an amount on your return for 2018 and you also failed to report an amount on your return for 2015, 2016, or 2017, you may have to pay a federal and provincial or territorial 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 2018;  

                 – 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.

    If you owe a tax debt that you won’t be able to pay, the right answer is to file anyway.

    Once you are filed and have your assessment, you’ll need to deal with the tax debt. This is also best to do before the April 30, 2019 deadline.

    If you can’t pay, get in contact with a debt consultant that has a CRA-specific program. For example, at DebtCare Canada, we have access to one of the only programs in Canada that can resolve a CRA back tax problem. We also have other financial solutions, like debt consolidation, home equity financing, and insolvency filing options.

    It can’t be reiterated enough — do not miss the Canadian tax deadline.

    For a refresher, here are the 2019 filing dates:

    • April 30, 2019: filing deadline for personal income tax.
    • June 17, 2019: self-employed or sole proprietor tax filing deadline.*

    *A note for those who are self-employed: while technically the filing due date for sole proprietors isn’t until June 17, the CRA will begin charging interest on any amounts owing on May 1, 2019. Therefore, it is also in your best interest to file before April 30, 2019.

    Have questions about filing or dealing with a tax debt? DebtCare Canada is here to help.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • CRA Tax Debt? Is a Voluntary Disclosure Application the Answer?

    Did you know about the Canada Revenue Agency (CRA) Taxpayer Relief Program for tax debt relief? If you have a CRA tax debt you’re likely pretty stressed about it, but don’t worry, you are not alone. Dealing with a tax debt takes work, but in order to avoid further aggravating the issue, it is something you need to do right away.

    Maybe you’ve already considered applying for the CRA’s Taxpayer Relief Program. This program gives taxpayers the opportunity, under certain conditions, to apply for relief of interest and penalties. Since penalties and interest on a CRA tax debt grow very quickly, this is an important resource.

    Tax debt may leave you feeling hopeless, but just remember: you’re not breaking the law simply because you owe money to the CRA. Just don’t ignore the problem either, hoping it will go away. CRA is mandated to act within their means to get the taxes you owe, and they can utilize all available enforcement tricks and strategies to do so. If you’re not careful, this can easily leave you in a financial mess.

    What types of enforcement action are we talking about? Wage garnishments, frozen bank accounts, even property liens, are all popular options for the CRA. Each one, however, has the potential to leave you feeling strapped.

    What options do you have? Enforcement action can be avoided if you have the means to pay the CRA in full. If you don’t, it is time to consider what other avenues are open to get the tax debt dealt with.

    Bankruptcy – If you have a tax debt in addition to a mountain of other debt, filing for bankruptcy may be the smartest solution. Doing so provides you with the ultimate fresh start – one you know you can achieve in as little as nine months.

    Consumer Proposal – A consumer proposal is another option. If your personal debt, including your tax debt, is significant, a proposal to all creditors may result in a decreased total owing, a definite payback period, and no interest.

    What’s important to keep in mind with both of these options though is that you want to have someone in your corner at all times. An experienced debt consultant has the knowledge and expertise to assess your unique situation and help you determine the best course of action to suit your current needs and future goals.

    When you have a CRA tax debt, the best thing to do is work with a qualified financial professional to know your options and make the wisest choice.

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

  • CRA Tax Debt Collectors Get More Aggressive

    shutterstock_445545787-1The Canada Revenue Agency (CRA) has always had a reputation for strict and aggressive collection behaviour. When money is owed, agents will try their hardest to retrieve it. This usually results in extreme stress on the taxpayer and enforcement action that can wreak havoc on their financial stability. What’s worse, those tactics seem to be getting more and more aggressive. If you’ve got CRA tax debt collectors calling, read on.

    When you receive an assessment, perhaps your initial thought is to call and speak to the CRA directly. When you try to negotiate with the CRA directly, before they even speak with you they will ask you to complete a financial disclosure form – this is a very dangerous form. They will want disclosure of everything from your bank account to your employer, to assets and income and expenses. Some of this information they may already have, or have the resources to obtain, but it is always easiest just to ask you.

    Remember, the goal of each and every agent is to get what is owed, as soon as possible. They are not interested in negotiating a long, drawn-out payment arrangement. Perhaps you assume that they will allow a realistic schedule based on your income. Oh, they will, but it will be based solely on your income – requirements to other creditors will not be considered, and your debt to the CRA will be made the top priority.

    Once this has happened, you will have little recourse. Since you’ve disclosed all of your information – where you bank, work, live, etc. – they can initiate enforcement action against you. This may include a frozen bank account, wage garnishment, even a lien on your home. Unlike other creditors, no court order is needed for CRA enforcement action, and once imposed it can be very difficult to remove.

    Our best advice is this: if you have received a notice of assessment/re-assessment informing you of a tax debt, don’t go directly to the CRA. You should consider speaking with a financial specialist to find out about all of the available options for getting rid of the debt before the CRA comes calling.

    If the CRA has already taken enforcement action, there are federal government programs that can protect your bank account and income. Speaking with a financial specialist, again, is the best approach here. We can help you take advantage of those programs and get rid of the tax debt once and for all.

    Protect yourself and your assets. At DebtCare, we can help you get rid of a CRA tax debt and help you retain your financial footing. Call us today at 1-888-890-0888.

     

  • How to Deal With a CRA Tax Debt Before The CRA Catches Up With You

    Tax debt can be terrifying; terrifying because owing the CRA money when you can’t pay will most certainly result in collection action. Tax debt is one of the main reasons people get behind filing income tax returns. Individuals get behind filing because the money to pay isn’t there and they fear that once the returns are filed the CRA is going to come looking for the money.

    If you have a tax debt or know that you will once you file late returns, don’t wait until the CRA catches up with you. You can beat them to the punch and get a plan together that will effectively deal with your tax debt.

    You see, you have more options to deal with a tax debt when the CRA has not begun enforcement action. A great example is homeowners who have tax debt. If you own a home, have a tax debt and the CRA puts a lien on your home, this will greatly reduce your options if you really cannot repay them monthly because the CRA will become a secured creditor.

    There are many financial options to effectively deal with tax debt. Look at a consumer proposal for example. By leveraging a consumer proposal you can freeze the interest accruing on your tax debt, potentially reduce the size of your tax debt and stop collection action such as a wage garnishment.

    The challenge is that your chances of being able to make a consumer proposal are greatly reduced once the CRA has taken enforcement action, secured through a lien on your home for example.

    The same is true for bankruptcy. If you were holding the bankruptcy card in your back pocket or hoping that filing for bankruptcy might seem like a way to get out of the tax debt, this too would no longer be a viable option once the CRA becomes secured on an asset like real-estate.

    The faster you deal with a tax debt the better. Never mind issues like enforcement action and financial planning; the existence of a tax debt and CRA collection action against you can result in damage to your relationships with your family or with lenders like your bank or mortgage holder, embarrassment at work and even health problems if you become stressed and have difficulty coping with your stress.

    You don’t have to put yourself through this. There are companies that can help you with your financial tax debt problem. Choosing the right solution for you can be easier said than done, but not if you know your options. Working with a financial consultant hired by you to represent your best interests is one excellent way to review your options and formulate your plan.

    Dealing with your tax debt before the CRA catches up with you will enable you to breathe a sigh of relief and move forward on a fresh footing.

    For more information about how to deal with a tax debt or if you have a tax debt and need help, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.