Nobody wants to owe the CRA money. However, thousands of Canadians discover each year that they owe more in income tax than they are able to pay. For people who are self-employed or have numerous sources of income, the issue may be that they haven’t saved enough money to pay their taxes. While others, may not get enough taxes taken off, which causes an owing at the end of each year.

As tax season is here, Canadians are looking forward to getting a little extra money through their refund, while others are concerned that they’ll end up owing more than they’ve already paid. Only a small percentage of Canadians are conscious of their options for CRA debt relief. Tax debt can be frightening to deal with. Compared to other kinds of creditors, the Canada Revenue Agency (CRA) has more authority to take direct collection action against you. Even before you are notified about an unpaid balance, interest, and penalties can add up.

Regardless of what the issue is, it’s essential that you know the requirements for CRA debt relief if you owe the money and are having trouble making payments.

CRA’s Powers to Collect Debt

The CRA has the authority to withhold your benefits and tax refunds, freeze your bank account, garnish your wages, and even seize and sell your assets. In severe cases, you might even be sentenced to prison if there is proof that you purposefully avoided paying taxes.

When the CRA seizes your wages, they demand that your company send a portion of your paycheque to them rather than to you. They can force your bank to turn over a sizable portion of your funds to pay off your tax debt by placing a garnishment on your bank account. This could put you in a dire financial situation and make it difficult to cover other bills and essential expenses.

Other creditors, like credit card companies, are permitted to use some of the same collection rights, but only with an order from the court. These steps can be costly and time-consuming, and they might only use them if you owe a significant amount of money. On the other hand, the CRA is able to make use of this authority without an order from the court.

Is there a CRA Debt Relief Program?

You might be qualified for the CRA relief program if you experience an event beyond your control, such as losing your job or being involved in a natural disaster. It offers taxpayers protection from fines or interest. That is, you can only get debt relief from paying penalties and interest. The same holds true if you can demonstrate that you are experiencing severe financial hardship that prevents you from being able to settle your tax debt.

You will need to provide evidence of your financial position in order to qualify for any tax debt relief. To ascertain the kind of monthly debt repayments you can fairly afford, the CRA will need to see all of your financial information, including your income, your spouse’s income, household expenditures, and assets. Don’t attempt to ignore the issue if you think you will have a tax debt to the CRA. Late filing will only result in increased fines. It is preferable to submit your taxes on time and resolve any tax debt as soon as possible because waiting can make things much worse.

How to Deal with CRA Debt

You will need to look into other options for debt relief because you cannot negotiate a tax debt settlement that involves a decrease in the principal. Tax debt can be dealt with during the insolvency procedure, where payments can be reduced and made easier to make.

In the event that you are unable to settle your unsecured debts in full, bankruptcy and consumer proposals may be the two options available to you for getting your debts discharged. When you initiate either of these procedures, the CRA may be listed as a creditor.

Tax debts, including income tax debts, are unsecured debts that can be discharged by submitting a consumer proposal. Speak with a debt expert at EmpireOne Credit, and get the advice you need about tax debt. In a proposal or Bankruptcy the amount of the reduction that the CRA will take is determined by your unique situation, your income, and other factors.

What to Do if You Are Seeking CRA Debt Relief Program

To seek CRA debt relief through a Consumer Proposal or Bankruptcy, contact a debt expert first. They will be able to guide you through the necessary steps to take in choosing the right procedure that suits your unique situation. They will walk you through your choices and explain which option is best for you.

Do not delay if you discover that you owe CRA income tax but cannot pay. Call (416) 900-2324 to get in touch with one of our debt experts at EmpireOne Credit. It is free! Debt-free feels good!