How Do I Deal With My Outstanding
Income Tax Debt?
You can often make a deal with the Canada Customs and Revenue Agency (CCRA) for taxes you owe. You can either negotiate payment terms or file a proposal under the Bankruptcy and Insolvency Act (BIA) rather than filing for bankruptcy.
Negotiate Payment Terms
If you owe CCRA and cannot pay the balance in full, you can explain your financial situation to CCRA and negotiate a payment plan. For example, if you owe $1,000, you may offer to pay $100 per month for the next ten months. Be aware that even if CCRA accepts your offer, you will continue to be charged penalties and interest until your debt is paid in full.
If you are unable to successfully negotiate terms, CCRA may take further action against you to collect the taxes owing. They can withhold tax refunds and GST Credits, garnish your wages or accounts receivables, take funds from your bank account and/or place a lien on any real property you own until your debt is paid in full. They do not have to go through the Courts so they can act very quickly.
File a Proposal
Another option available to you is to file a proposal. Under a Proposal, CCRA may accept less than the full amount owing.
A proposal is a legal process under the BIA that enables you to make an offer to all creditors to modify your payments or to pay them a percentage of what you owe. A proposal allows a fresh start without going bankrupt. In a proposal, all of your assets must be disclosed, and all your creditors must receive a better financial settlement than they would if you were to file bankruptcy. You must contact a licensed Trustee, such as Alger & Associates, in order to file a proposal. Terms of the proposal will depend on your unique situation.
For CCRA to accept your proposal, it must include the following terms:
All tax returns must be filed and up to date prior to acceptance of the proposal.
All tax returns due during the proposal period must be file as required and any tax owing paid as it becomes due. The proposal will only include taxes owing prior to the proposal date.
In the event that taxes for the year of the proposal or prior years are re-assessed and a refund generated, that refund must first be applied to your outstanding debt to CCRA.
In some cases, CCRA may require additional terms.
This site provides free information about personal bankruptcy in Edmonton and personal bankruptcy alternatives in Edmonton , including answers to common personal bankruptcy questions. This site is sponsored by Grant Thornton Alger Inc. - Calgary Bankruptcy, Edmonton Bankruptcy, Alberta Bankruptcy, Canada Bankruptcy
