Resolving your Tax Debt with Canada Revenue Agency (CRA) professionally

Owing tax debt to Canada Revenue Agency (CRA) can be deeply stressful and failure to take appropriate action can worsen the situation. Ignoring the problem will not go away on its own. This is equally true of any other debts you owe to your creditors. However, when it comes to tax debt owed to Canada Revenue Agency (CRA), it is extremely important to understand what options are available to you considering that CRA can take enforcement action against you without going to the court. Moreover when CRA takes the enforcement action against you, such as garnishing your salary | income, or placing a lien on your property, it can be virtually impossible to get them to lift the enforcement on your own. Professional help is required.

Further it must be understood that the CRA can impose a garnishment of up to 50% of employment income, and up to 100% of other types of income including sub-contractor income. They can also send a “Demand Notice” to clients of businesses or business owners specifically demanding them to re-direct any receivables to CRA.

When CRA decides to freeze your bank account, they will generally send you and your bank a “Requirement to Pay” letter indicating the amount of tax debt owed and direct the bank to freeze your bank account irrespective of it being a joint or single account. Should you own a property, CRA will register a property lien which will put you in difficulty when selling or refinancing your home, consequently damaging your relationship with your mortgage holder(s). Further, if the tax lien is greater than the equity in your property, this will usher an even large challenge because the existing mortgage holders will not be able to renew without the CRA moving into first position on the Title.

It may be possible to negotiate a payment settlement with CRA but the likelihood of negotiating any successful tax debt settlement will depend upon number of other factors, from how much you owe to CRA, what is your current ability to repay the debt, and what has been your past history in dealing with CRA. However, as a general rule CRA will not accept less than the full amount of tax debt owed to them. Even if you were successful in negotiating a repayment term with CRA, you will still be required to pay them the full amount of tax debt (and not a reduced amount which is only possible through making a Consumer Proposal through a Licensed Insolvency Trustee) in 12 months or so. The unpaid balance of tax debt will continue to incur penalties and interest until the amount owed is paid in full.

It pays to consult with a Licensed Insolvency Trustee to fully understand how you may be able to get your tax debt reduced by way of making a Consumer Proposal under the Bankruptcy Insolvency Act. Any other claim by any agency to reduce debts calls for due caution. If you don’t have the financial capability of making a reasonable settlement amount in a Consumer Proposal, the next best option is to make an Assignment in Bankruptcy (i.e. file for personal bankruptcy) to get rid of your tax debt.

To discuss you debt problem, we urge you to reach out to us at Albert Gelman Inc on 416-504-1650 or 905-306-1650, and we will be happy to help you find a satisfactory solution.



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About Syed Hussain

Syed Hussain, Ph.D: Banker, Bankruptcy Analyst, Forensic Accounting & Fraud Examiner, Cyber-Crime & Anti-Money Laundering Advisor, Internal Auditor & Counterterrorism Strategist . As an avid reader and traveler, the former air force pilot, likes to connect with like minded people and engage in intelligent conversations. He enjoys music, film and politics, as well as visiting museums, art galleries and air shows. Syed enjoys horse back riding and swimming. Besides English, he speaks other languages. At the end of the day, he can be found relaxing with a good beer and a fine meal.

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