You have filed you Canadian personal tax return by the April 30th deadline and you owe the CRA money. Now what? You have heard horror stories about how the Canada Revenue Agency goes about collecting taxes dollars.
You need to act fast, right?
Well that is exactly what is wrong with tax-filing season in Canada.
What about if you owe more to the CRA because you already have a balance, or if you happen to be self-employed and you plan on having your tax returns prepared after the April 30th deadline, but before the June 15th deadline for self-employed Canadians, and you find out that you owe money to the CRA?
Or, what if you carry a balance year-over-year because between taxes owing and installment payments, you just can’t keep up?
What do you do?
What are your options?
If you listen to the radio, you are likely to have noticed that about every 3rd ad is a commercials talking about debt. In these commercials, very calm voices talk about how it feels to be in debt and how they a simple solution for debt. They even refer to “programs” which are supported or endorsed by the Canadian government. and in 10 minutes / 15 minutes / 20 minutes, you too can be debt free.
It’s convenient. Too convenient…
Their solution is bankruptcy or a consumer proposal, and their solution is a great way for you to no longer have debt owing to the Canada Revenue Agency, or your credit card provider, etc.
What they fail to mention, is that you are paying them money to trade your debt problem for a credit problem.
Sure, you won’t owe the CRA any more, but now that the euphoria of that “win” has worn off, you now have to face reality that you have no credit for 3-7 years at best. During that 3-7 years, you won’t have a credit card unless it’s a prepaid one, and you won’t be able to get a loan, and you cannot be the director of a corporation.
During that period where you are under a proposal or in bankruptcy, the CRA can, and still will raise assessment where they are allowed by law to, such as raising s160/s325 assessments for assets transferred to avoid paying the CRA, or if you act as a director even though the director is someone else’s name.
Forget about it if the CRA has already placed a lien on an asset. That survives a bankruptcy.
But the commercials make it sound SO appealing, so quick, and so good.
I’ve always felt that bankruptcy and Consumer Proposals are great options for people with no options. If your debt is tax-related then you really should know what your options are before jumping at the first thing you hear and making these Trustee / Insolvency firms rich, so they can advertise even more, but up bigger billboards and open their own “tax solution” businesses to “help” you with your tax problems.
Don’t fall for the easy way out, because you get way more than you bargained for!
Instead, contact us, inTAXicating, and let us diagnose your debt, and tell you the best options for you, and not what works best you the trustee or the CRA.