Tag: tax debts

Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

We are well into July now and that means, if you are self-employed, your tax filing deadline has passed.

If you filed on time, great, you’re set for another year. However, if you’ve yet to file, for whatever reason, you may be facing some serious penalties and a significant tax debt.

Many people don’t file because they know they will end up owing and can’t pay or don’t have proof to support various write-offs.

Often these individuals put off filing until the money to pay can be amassed (whether or not this is a realistic goal), while others choose to hold off in the hopes that the Canada Revenue Agency (CRA) will not be made aware of the transgression. Trust us, they will find out.

The CRA is often the most aggressive when it comes to trust monies and tax debt. So, if you’ve collected HST all year, but didn’t file by the deadline, and thus have not declared or submitted these trust monies, the CRA is going to come in search of those funds.

The CRA charges a late filing penalty of 5% of your balance owed plus an additional 1% for each month your return is late.

As long as your return was filed by the June 15^th deadline, you don’t have to worry about these penalties. However, you still have to worry about interest.

Interest is charged on any unpaid balances at the established rates which are set by the CRA on a quarterly basis.

Although your tax return is due on June 15^th, interest will start to accrue the day after the personal tax filing deadline (April 30^th). That means, whenever you do decide to file, if you owe, those penalties will be applied retroactively.

Once the CRA is made aware of your debt, that’s when things can really start to get ugly. Although it is not illegal to owe a tax debt to the CRA, and thus prosecution is not a consequence, collection enforcement action is.

Garnishments of your income, a frozen bank account, even a tax lien may be in your future.

Our goal here is not to scare you.

If this is the situation within which you currently find yourself, you’re probably already concerned and are looking for tax debt consolidation. Our goal is to impress upon you the importance of dealing with tax debt as soon as possible.

Ignoring the problem will never make it disappear. It will actually just make things worse.

If you’ve held off filing your taxes because you know you won’t be able to make the necessary payments, we can help with tax debt relief. At DebtCare, we have years of experience helping Canadian self-employed individuals and small business owners tackle troublesome tax debts.

Get in touch with us today by calling 1 (888) 890-0888.

July 20, 2017
Canada Revenue Agency Got You Down? Here Are Some Tips for Dealing with the Tax Man
Owing money to the Canada Revenue Agency is by far one of the scariest financial challenges that many Canadian taxpayers face. The Canada Revenue Agency is not an average creditor because they are part of the federal government. They have significant authority with respect to enforcing tax compliance and collecting tax debts.

This authority includes (without a court order or notice to you):
1. Pursuing criminal charges under the Income Tax Act
2. Imposing penalties
3. Imposing interest
4. Notionally assessing your income even when you don’t file a return
5. Garnishing your wages
6. Freezing your bank account
7. Placing a lien on your home
8. Placing a lien on other property
9. Garnishing your company’s receivables, and more….
The Canada Revenue Agency can be ruthless. If you have a tax debt that you can pay, you must be very careful. The Canada Revenue Agency may seem amiable and willing to make a payment plan with you. They will send you a request for financial disclosure. On the financial disclosure you will have to tell them where you live, where you work, provide all sources of income, provide all assets, banking information and more… You may complete this form being open and honest indicating all of your liabilities and payment and then based on what cash flow is left, promise a payment plan.

Once the Canada Revenue Agency receives your financial disclosure they will know all of your assets, where you bank, where you work – you will be completely exposed. Also, when the CRA reviews your budget and sees payments to other creditors like loans and credit cards, they will exclude them from the budget and ask you for significantly more in terms of a monthly payment than you are comfortable with.

This will leave you in the worst position – Who do you pay? What about your credit? What about your family? What about your job? This is how the human aspect of having a tax debt can be sometimes even more impactful than the financial consequences. Many taxpayers suffer with medical problems that stem from stress associated with an inability to pay a tax debt.

Listen, you cannot draw blood from a stone and there are many reasons why Canadian taxpayers find themselves unintentionally in trouble with the Canada Revenue Agency. A good financial consultant can guide you through programs that are available that can stop CRA collections and help you deal with your tax debt. Attempting to negotiate directly with the CRA will often lead to increased exposure so the best thing you can do if you have a tax debt you can’t pay is seek professional help.

If you need help with a Canada Revenue Agency tax debt contact DebtCare Canada online or call 888-890-0888.
June 17, 2013
Canada Revenue Agency Collections Policy has the Potential to Ruin Your Life

The Canada Revenue Agency has a very aggressive collection policy. Their mandate is to collect past due tax debts and they have what appears to be limitless authority to do so. This article will outline the top 4 tactics that the Canada Revenue Agency will deploy to collect from you when you have an outstanding tax debt.

1.       Wage Garnishments. The Canada Revenue Agency routinely places wage garnishments on taxpayers who have an outstanding income tax debt. A wage garnishment served upon an employer could result in a garnishment of your wages of up to 50%. Secondary income like pension income, insurance income, etc. can be garnished up to 100%. Once the Canada Revenue Agency serves your employer with instructions to garnish your wages, they must and will comply. Once a wage garnishment is attached it can be very difficult to remove.

2.       Property Liens. The Canada Revenue Agency will place a lien on your home, vehicle or equipment (in the case of a business), if they learn that you have an asset. Even if you have no equity in the asset and no ability to refinance it, they will still place a lien on it. If you cannot raise the money to pay your tax debt in full, they can force you to sell the asset and will take any proceeds (if any) to cover the tax debt.

3.       Requirements to Pay on Bank Accounts. If the Canada Revenue Agency sends your bank a requirement to pay, your bank account will be frozen. The bank will hold the money in your bank account for 30 days and then send it to the Canada Revenue Agency. Outside of the fact that you will lose all the money in your bank account, it will also alert your bank to the fact that you have a tax problem. In many cases this will permanently damage your relationship with your bank.

4.       Set-Off’s on Invoices. If you are a small business owner, the Canada Revenue Agency can send a set-off notice to your customers. This notice will direct your customers to forward the payment of your invoices to the Canada Revenue Agency. Not only can this put you out of business because you will have no business income coming in; in addition, your clients may be apprehensive about continuing to work with you under these circumstances.

Depending on the severity of your tax problem, the Canada Revenue Agency could take more than one of these collection actions, concurrently. You do not have to let things go this far; there are services available to help individuals and businesses that have an income tax debt. If your wages are already being garnished or your bank account has already been frozen, there are Federal Government programs available to help. Once you participate in one of these programs, the Canada Revenue Agency will immediately, and must by law, remove a wage garnishment and/or unfreeze your bank account.

For more information about the Canada Revenue Agencies collections policy or to see if you qualify for relief contact Michael Goldenberg at DebtCare Canada by calling 888-890-0888 or visit www.debtcare.ca

December 27, 2011