Provincial and Federal Student Loans: Resources and Information to help you Navigate the System

You have taken out a student loan to assist you while you go to school. Keep in mind that whether you complete school, or drop out, you still have to pay back that loan, and not doing so can have considerable consequences.

In my early 20’s, I had taken a part-time job working for Equifax who at that time collected student loans. I recall a conversation with a girl in Kanata, Ontario who owed $40,000 on her loan and was paying $10/month.

Rather than yelling and her and demanding payment, I asked her what she intended on doing with the loan. She was quite sincere when she said that she was making the $10/month payments to appease the collection agency and that she felt she didn’t actually owe the loan.

I felt bad.

When I asked her why she didn’t owe it, she said simply because she didn’t go to school, thus didn’t need the loan for school.

“So, what did you do with the money you got from the government?”, I asked.

“Oh, I bought a car, a huge TV, and some new clothes… But I didn’t use it for school.”

“Oh”, was all I could think of… “but you took out a loan, and still need to pay the money back.” I spent the next 15-20 minutes answering questions and providing information.

2 days later she filed for bankruptcy.

She should have used that money and gone to school!

Regardless, there is a lot of information regarding student loans and how to get out of them. Rather than looking at it solely from that way, let’s look at them right from the begging through to the completion of the loan.

Beginning with, once you get a loan:

Make a plan to repay your student debt

1. Who you need to repay

You may have loans or lines of credit that you need to repay to the government and/or your financial institution. In some provinces and territories, Canada Student Loans are issued separately by the federal and provincial or territorial governments, which means, you could have more than one loan to pay back.

Verify your contracts to determine where your debt comes from and where you need to repay it.

2. How much you need to repay

Verify your loan or line of credit contract to figure out the following:

  • Total amount owing
  • Interest rate applied to the debt
  • How to repay the debt
  • How much to pay
  • How long it will take to pay back the debt

Contact the organization that provided your student loan or line of credit if you don’t have the information listed above.

3. When you need to start paying

Different repayment rules may apply depending on your type of student loan.

Canada Student Loans (CSL)

CSL’s have a 6-month non-repayment period after graduation and during that period, payments do not have to be made and interest will not be charged on the loan. This period begins after one of the following;

  • Finish your final school term
  • Transfer from full-time to part-time studies
  • Leave school or
  • Take time off school

Before the 6-month period ends, you’ll have to log in to your National Student Loan Service Centre account to find out your repayment schedule.

Note: You can and should still make payments at any time after receiving your loan. You don’t have to wait until after the 6-month period ends to start repaying. Paying it early and often reduces the amount of principle owing which reduces the amount of interest charged.

Find out more about the repayment schedule and options for your Canada Student Loan.

Click here to: Log in to your National Student Loan Service Centre account

Provincial student loans

The repayment rules of provincial student loans vary depending on the province or territory where you applied for your loan.

Find out about repayment rules and schedule for student loan programs in your province.

Student Lines of Credit (SLOC)

If you have a SLOC through your financial institution, you’ll have to pay the interest on the amount of money you borrow while you’re still in school.

After graduation, many financial institutions provide a 4 to 12-month grace period during which only interest payments are required to be made. This benefits the institution because they’re getting your interest payments and you are not reducing the amount of principle owing. Once the grace period ends, you’re back to paying the debt through a repayment schedule agreed upon with that institution.

Contact your financial institution to get information about paying back your student line of credit.

Having trouble paying

If you need help with repaying your CSL, you may qualify for the Repayment Assistance Plan (RAP).

Find out more about the Repayment Assistance Plan for your Canada Student Loan.

If you’re having trouble repaying a provincial student loan, contact your student aid office. For repayment assistance with a loan or LOC provided by your financial institution, contact your branch to determine what your options are.

Understand that by making your payments smaller, it will take you longer to pay back your loan. You’ll end up paying more interest on your loan.

Find the student aid office in your province or territory.

How student debt affects your credit score

Student loans and lines of credit form part of your credit history which means if you miss, or are late with, your payments, it can affect your credit score.

Your credit score shows future lenders how risky it can be for them to lend you money. A poor credit score makes it difficult to borrow money from a bank, get a credit card, and can impact your ability to get a job, or rent an apartment.

Bankruptcy

Understand that if you file for bankruptcy within seven years of finishing your studies, your Canada Student Loan won’t be discharged. You’ll have to continue paying back your loan.

Learn how bankruptcy affects your CSL debts.

Tips to repay your student debt faster

1. Make lump-sum payments

Making lump-sum payments at any time will help you pay down your loan faster. Lump-sum payments will go toward interest first and then to the principal of your loan. Paying down the principal reduces the total amount you owe, which means you pay less interest.

If you make lump-sum payments while you’re in school or during the 6-month non-repayment period, the payments go towards the principal of your loan.

Find out about making lump-sum payments on your Canada Student Loan.

2. Increase the amount of your payments

The amount you pay over and above your minimum payment goes toward the principal of your loan, which decreases the total amount you owe, and the amount of interest you have to pay.

3. Budget your payments

Build your student debt payments into your budget and make payments that are larger than the minimum payments. You can also speak with your financial institution about setting up automatic payments.

When planning your budget and automatic payments, make sure you know when your payments are due. Remember that if you have more than one loan or line of credit, you may have more than one payment due date.

Loans in Default

Rehabilitate Canada Student Loans and Canada Apprentice Loans in Default

As of January 1st, 2020, borrowers will have a new option to rehabilitate Canada Student Loans and Canada Apprentice Loans in default. The option is to add interest to the principal of your loan (capitalize the interest) and make two payments to rehabilitate your loan.

Repayment assistance

Missed loan payments? Can’t make payments? The Government of Canada has repayment assistance options that may be able to help. Contact the National Student Loans Service Centre (NSLSC) and your provincial or territorial student financial aid office to discuss repayment options.

Canada Student Loans

If you have a Canada Student Loan, one of the following measures may be right for you:

Repayment assistance

Getting your loan out of collection

If you have missed 9 months of payments, your federal student loan will be sent to the Canada Revenue Agency (CRA) for collection.

Once in collection, you are no longer able to get student aid. To be able to get student aid again, you must bring your loan up to date.

  • Contact the CRA to make a payment arrangement and bring your loan up to date.

For the provincial or territorial part of your student loan, you will need to contact your province of permanent residence.

For borrowers from Saskatchewan you may contact the CRA for both federal and provincial parts of your student loan.

Rehabilitate your Canada Student Loan

If your loan is in collection, you may be eligible to bring your Canada Student Loan up to date. To do so, contact the CRA to see if you are eligible to rehabilitate your federal student loan. Make payments equal to two regular monthly payments and choose one of the following options:

  1. Pay off all outstanding interest on your loan, or
  2. Add all unpaid interest to the balance of your loan. You will receive a new payment schedule for the new balance.

Note: The option to add the unpaid interest to the balance of your loan can only be done once.

Once you make your payments, call the NSLSC and ask to speak with a Canada Student Loans Program agent. You should receive a new repayment plan within one month.

Bankruptcy doesn’t erase student loans during the first 7 years

Be aware: if you file for bankruptcy within seven years of finishing your studies, your Canada Student Loan won’t be cancelled. You will have to continue paying back your Canada Student Loan.

Industry Canada provides a helpful resource to learn how Bankruptcy affects your Canada Student Loan debts

CRA Snitch Line Accepting Tips on COVID Fraud

The Canada Revenue Agency (CRA) have announced that they are opening up their Informant Leads (snitch) line to information regarding COVID-19 benefit program fraud.

Amid reports that people are double dipping or taking the benefits when there are not entitled to, the CRA are intent on not waiting for 2021 when people file their tax returns, but are asking for Canadians to come forward and provide information regarding the Canada Emergency Response Benefit (CERB), the Canada Emergency Student Benefit (CESB), and the Canada Emergency Wage Subsidy (CEWS).

The Snitch Line accepts information of tax cheating such as not declaring all income, accepting “under the table” cash payments or setting up a fake business to claim losses and thus reduce taxes. The information reported goes right to an audit group, who compare the information they receive with the information the CRA already has on that individual and business, and if the amount to recover is significant, will act to seek recovery.

The CRA said it is looking for information regarding people who are receiving either CERB or CESB who were ineligible, or businesses or charities who are “misusing” the wage subsidy program.

The decision to go after cheaters marks a significant turning point in the Trudeau government’s desire to take on fraud of COVID-19 emergency aid programs. In mid-April, a CRA spokesperson dissuaded Canadians from snitching on potentially ineligible CERB recipients because, at that time, the CRA said their focus was on “getting crucial (CERB) payments to those who urgently need it now.”

The CRA stated that those who received a payment to which they weren’t entitled will be required to repay the amount in due course.

Due course meant with the filing of the 2021 personal income tax return for many who applied for and received the credit, only to learn that their income did not dip below the amounts making them eligible to receive the funds. With so many Canadians providing direct deposit information to the CRA, means that with direct access to your bank account, the CRA can take those funds when they want. It also means if there are not sufficient funds in your bank account that the CRA can freeze you bank account and send a garnishment to your employer, if warranted.

With this significant change in direction, it should be noted that any business or individual who are caught receiving money they we not entitled to, will be ordered to reimburse it and it could be quite costly. In the case of the wage subsidy, a business which falsified documents, in order to claim the benefit can face penalties up to 225% of the amount received through the program.

The CRA and Service Canada have records of all individuals who’ve received payments for the CERB and CESB. What has changed is that the CRA have brought in their audit staff – presently not working on audits due to COVID – to verify payments were correctly allocated.

How to Snitch

In order to successfully provide information to the CRA through their Informant Leads line, there is information that the CRA requires.  Remember, all information provided to the CRA is anonymous.

Depending on the program they may have falsely claimed, the CRA would require details on the suspect’s work situation (CERB and CESB), their schooling situation (CESB) or their employer’s number of employees and total payroll (CEWS).

In many cases, people brag to their friends and neighbours about how stupid the government is, by providing them with benefit payments when they are not entitled, and that information is usually enough for the CRA to investigate.

The link to the CRA’s Informant Leads Program information, is here.

Filed your 2019 Personal Income Tax Return: Now what?

What an absolute crazy year 2020 has been thus far!

The tax filing deadline for individuals to file their 2019 personal income tax returns (T1) in Canada was June 1st, by 11:59pm. For Canadians who have earned self-employment income, their returns are due by June 15th, 2020. Payments for balances owing are due to the CRA by September 1st, 2020, and the CRA is currently not charging interest on exsting balances owing the them, nor interest or penalties for any late payments or filings for the time being.

New and enhanced services

Check CRA processing times – Want to find out quickly how long it will take for the CRA to process your return, or your refund? Use the Check CRA Processing Times tool on canada.ca to get a targeted completion date. The new tool uses published service standards and information you select from drop-down menus to calculate targeted completion times for various programs.

Dedicated telephone service for tax service providers – If you are still working on a tax return(s), the CRA have been offering this service to small and medium income tax service providers across Canada for the 2020 tax filing season. By using this service, income tax service providers can connect with experienced CRA officers who assist with complex tax questions.

Representative authorizations – Thank goodness, the CRA has created a new e-authorization process for online access to individual tax accounts which permits representatives to request access to individual tax accounts using a web form through Represent a Client. As a result, the existing T1013 form will be discontinued for access to individual tax accounts.

The T1013, RC59, and NR95 will be combined into one form called the AUT-01 Authorize a Representative for Access by Phone and Mail. This form will only be used to request offline access to individual and business tax accounts.

Owing Money to CRA

If you have filed, or are about to file and you owe money to the CRA, there are a couple of critically important facts you should keep in mind.

  1. If you have applied for any of the COVID-prompted benefit programs, and have done so through Direct Deposit, you may, unfortunately, be at risk.
  2. The CRA is delaying the payment of balances owing until September 1st, while not charging interest on all accounts except payroll accounts. This shouldn’t mean its okay to forget it until the fall, but rather, with no interest being charged on existing balances, its the best time to figure out ways to catch up, set aside funds, or find / earn funds to pay off the CRA
  3. Before we all know it, it will be September, and a few things will be certainties. Our year-end will be fast approaching for the 2020 tax filing season, any balances owing to the CRA will be due, and the Canadian debt and deficit will be through the roof. The Federal government will need those funds ASAP, and aside from raising taxes, they will likely begin aggressive collections of taxes owing. The quickest way the CRA can recover funds, is by issuing a Notice of Assessment (which has legal warning in it) and then taking those funds from your bank account.
  4. You have options outside of bankruptcy, consumer proposals, high-interest loans, or high-rate mortgages. Preparing in advance for this situation and working with the CRA can prevent unwanted or unexpected surprises.

 

The CRA’s collections staff have already been advised where to locate direct deposit information and how ensure it is accessible when full collections are permitted.

Don’t wait until it’s too late.

inTAXicating can assist with anything CRA-related. With over 10-years experience working in the CRA’s Collections department, we know things the CRA will never tell you.

 

Owing Taxes to the CRA: Real options to consider

The Canadian Tax Filing deadlines for regular filers and for filers with self-employment income are rapidly approaching.

Due to the COVID-19 pandemic, the Canada Revenue Agency (CRA) has pushed out the tax filing deadline for regular tax filers from April 30th, 2020, to June 1st, 2020.  Canadians with self-employment income were due to file by June 15th, 2020, and that date has remained the same.

Any payments for the current tax year are due by September 1st, 2020, which applies to balances and instalments under Part 1 of the Income Tax Act due on or after March 18th and before September 1st, 2020.

If you earned significant self-employment income, for the first time, you might be in for an unexpected surprise when you file your tax return, because there will likely be a balance owing to the CRA. This balance owing is a result of having to pay the amounts that an employer would have normally deducted from your pay, including both portions of the Canada Pension Plan (CPP).

If you haven’t made other provisions to cover your tax debt at the end of the year, you could have a problem.

If this were not a pandemic year and the CRA was fully operational, I would warn that tax debt is serious and should be dealt with immediately.

As we are all aware, the collections staff at the CRA have considerable “power” to find and collect money that are owing to the Crown.

With the amount of government benefits being offered up this year, Canadians have been providing their banking information to the CRA in record numbers, and it is that banking information which the CRA can, and will, use to recover the taxes owing to them, likely in record time.

In effort to deter Canadians from not paying the CRA, they charge penalties and interest (which compounds daily) on your overdue taxes.

They can withhold payment of your Child Tax Credit and GST rebate. They can take money from your bank account or garnishee your wages.

If those methods do not result in full payment of taxes, the CRA will then check to see if you own real estate, as they can register a lien against your property.

When a lien is registered against your property it can prohibit you from refinancing or selling your property until the outstanding debt is paid in full.

You may also find that if you are non-compliant (not filed up to date with the CRA), you may not be able to secure mortgage financing to purchase a home, buy a cottage, get a loan, or access equity in your property.

Many Canadian banks and credit unions will not provide an unsecured loan for the payment of income tax debt and they generally cannot refinance an existing mortgage to cover the debt either. When they learn of a lien, they deem you a credit risk and are more comfortable walking away from you as a customer then take a risk lending you funds that you either cannot pay or that the CRA will end up taking.

 

What Can You Do

Normally, you would contact the CRA immediately – but these are COVID times – and the CRAès collections division is presently not taking collection actions or weighing in on payment arrangements.

Pay what you can, as much as you can.  Because paying anything less than the balance owing is going to result in interest accumulating.

There is no need to pay more to the CRA, unless you absolutely have to.

If these were normal times, you might be able to negotiate a re-payment arrangement covering 3-6 months, but the interest continues to accrue.

 

What NOT to do

This is important to note – filing for bankruptcy, or filing a consumer proposal, does not discharge a lien against your property. If you go bankrupt on your CRA debt, the lien remains and – even worse – accrues interest over time. Even after your discharge from bankruptcy, the lien remains in force, until you eventually sell your home. Transferring a tax problem for a credit problem is not always the best option.

Do not transfer any assets, or your property, to another person. That will not solve your problems, but rather cause other ones.

Removing assets from the reach of the CRA will result in the raising of a Section 160 (325), non-armsè length assessment, which takes your tax debt and makes it jointly and severally liable with the person who now owns your property.

Do not ignore it. Far too often, Canadians ignore the requirement to file and pay their taxes. This means a balance owing to the CRA continues to grow and grow. When the balance gets to be too high, people feel they have very few options, and consider bankruptcy or insolvency to be one of them. Worse that this scenario, is when one of the parties with a large tax debt falls ill, passes away, or becomes separated from the other, and now the ability to resolve the tax matter becomes that much more difficult.

 

A Better Solution

If you are a homeowner then having an experienced mortgage broker working for you can save you both time and money when seeking a solution to your CRA problem. If you simply can’t pay the full amount of your back taxes, consider refinancing your mortgage and using the equity in your home to consolidate all of your debts, including credit card debts, at a rate which might even be better than the rate you are currently paying.

Mortgage brokers have access to lenders that will allow a refinance of your existing mortgage or second mortgage options to pay off outstanding CRA debt.

If you have tax debt, or are going to be facing some tax arrears, do not worry. Contact inTAXicating and let us provide you with the truth around your tax options and help you find the best solution for you.

info@intaxicating.ca

intaxicatingtaxservices@gmail.com

 

Best and Worst Major Cities for Business Tax Burdens: C.D. Howe Institute

On April 23rd, 2020, the C.D. Howe Institute released a report which identifies the best and worst major Canadian cities for business investment as measured by overall tax burdens.

The link to the reports is here; “Business Tax Burdens in Canada’s Major Cities: The 2019 Report Card.”  Authors Adam Found and Peter Tomlinson compared business tax burdens in 10 Canadian municipalities, the largest in each province.

“Municipalities and provinces would do well to pay attention to business tax burdens, particularly those imposed by business property taxes, since they impede investment and businesses’ ability to survive and invest after the present pandemic,” says Found.

Before a business decides to locate or expand in a given jurisdiction, it must consider the tax implications of such an investment.

Heavy tax burdens reduce potential returns, driving investment away to other jurisdictions and, with it, the associated economic benefits.

Found and Tomlinson estimate the 2019 Marginal Effective Tax Rate (METR) for the largest municipality in each province by aggregating corporate income taxes, retail sales taxes, land transfer taxes and business property taxes. Their findings measure the tax burden on a hypothetical investment that has the same net-of-tax return regardless of where in Canada it is located.

What Did They Find?

That municipal business tax burdens are highest in Montreal, Halifax and St. John’s, while near the group average in Calgary, Charlottetown and Moncton.

The most competitive municipal business tax environments were found in Vancouver, followed by Saskatoon, Toronto and Winnipeg.

I’d be curious to see if there was any consideration given to the associated costs which impact businesses in these markets, such as the cost and availability of parking and ability of the general public to access these businesses. Certainly, an expensive parking rate which is heavily enforced by the parking police would deter customers in certain parts of these cities.

Then again, so does bad signage…

Nonetheless, the bottom line is this. If the cost of investing in a Canadian jurisdiction is higher than the cost of investing elsewhere, then that jurisdiction’s capital stock will be smaller than it otherwise would be, because businesses go where the costs are cheaper so they can try to make more money.

The higher the METR (tax rates), the greater the investment loss and overall economic harm.

Tax dollars are important for budgeting purposes because jurisdictions use those dollars to support expenditures. When the tax base erodes, either taxes are increased, expenditures cut, or debts and deficits increased.

Calgary’s experience with depreciating property values was also discussed in this report, because in that city, as the assessed values of downtown office buildings depreciated rapidly, that caused unmanageable tax shifts onto other businesses in the city, to make up the shortfall.

“Calgary is a cautionary tale for cities across the country,” says Tomlinson. “With the current cash crunch for businesses, provincial property tax cuts – like those just announced in British Columbia – could be key to businesses’ survival.”

Read Full Report

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

Looking After Canadians Tax Interests During and After COVID-19

The COVID-19 pandemic has changed the way Canadians do business for now, for the immediate future and possibly forever. One thing, however, that has not changed forever, is taxation.

Yes, the government of Canada has pushed off some tax filing deadlines, paused Canada Revenue Agency (CRA) collections actions, and provided “benefit” payments to those in need (and those who don’t really need), but in the midst of this massive outlay of money, there are some key facts to keep in mind to keep you safe and secure.

1. File Your Taxes

Life will go on, businesses will slowly open, and people will get back to work. As of the writing of this post, April is coming to an end, and the June 1st Personal Income Tax (T1) filing deadline is fast approaching! While any funds owing to the CRA on those taxes are not due until after August 31st, if you are going to owe and your account is going to wind up in Collections, it’s best to start making payments as soon as you can.

Don’t wait until you’re back to what resembles a “normal” work day, to realize that you cannot file your taxes because the likely response from Taxpayer Relief is that you had plenty of time while self-isolating. Don’t take that chance. You don’t need to pay interest to the CRA for filing late. File on time!

2. Beware Direct Deposit

If you signed up for any of the federal government’s “benefit” programs, and in doing so, provided the CRA with your Direct Deposit information, then you need to ensure your tax compliance is a priority for you going forward.

By giving the CRA access to your bank account, and with the current deficit of $20 billion dollars set to double due to the benefit payments, the CRA is going to be in a hurry to recoup those funds. If you delay paying, they’ll issue a Requirement to Pay (Garnishment) and take the funds from your account.

3. Do NOT Ignore CRA

Once the pandemic is under some sort of control, and life goes back to “normal”, if you are ever contacted by the CRA’s Collections department there are two things you should not be do. 1) Do not ignore them – if you get a letter or a legitimate phone call – speak to them. 2) Do not Lie. With hundreds of accounts in their collection inventories, you are just a name or number to the CRA unless you lie to them. Then it gets personal… Tell the truth. They probably know it already anyways.

4. Pause Before Bankruptcy / Insolvency

Times are tough for everyone, but if you have debts which are tax-related, or if your inability to pay other creditors is based on a tax debt, then before exchanging your tax debt for bad credit, reach out to someone who knows how the CRA works with Canadians like you, and don’t jump into something just because advertising makes you think that this “government program” is available. There are lots of better “government programs” available which can help you without something negative happening to your credit in return.

5. Explore Resolution to Tax Debts / Compliance Issues

If you are behind on tax filing – personal or corporate – owe money to the CRA, or locked in a dispute with the CRA about amounts owing? Now is the perfect time to get filed up to date, apply for Taxpayer Relief, and get the truth about your tax liability and your chances of success. Take the time to invest in yourself and resolve your tax issues.

6. Questions? 

If you have questions, ask them in the comment section. If we can answer them, we will. If you leave a valid email and the question is specific, you’ll get an email. If the answer to your question requires more information, then you’ll be asked them, and if there is an opportunity to help you further, you’ll get the truth about what benefits you, not us, not the CRA.

Bouclair Inc, its CEO and former VP charged by the CRA for Tax Evasion

The Canada Revenue Agency (CRA) is reporting that home-decor chain Bouclair Inc. its CEO, and former VP are scheduled to go to trial on tax-evasion charges in January 2021.

The CEO, Peter Goldberg, a Westmount, Quebec resident faces eight charges alleging he violated the Income Tax Act between 2009 and 2011. Bouclair Inc. is charged in the same case as their former VP, Erwin Fligel.

The charges were filed by the CRA in 2018 following an investigation where by the CRA alleges that the CEO and former VP willfully evaded payment of income taxes and made false statements when filing income tax returns for Bouclair Inc. and for Goldberg.

Fligel is charged with six charges while Bouclair has been charged with 4 charges. The charges do not specify the monetary figures involved.

During a hearing before Quebec Court Judge Jean-Jacques Gagné held at the Montreal courthouse on January 30th, 2020, both sides agreed to schedule a trial between Jan. 11-29, 2021.

In November, Bouclair Inc. announced it would file for bankruptcy as part of a plan to allow it to be acquired by a new investor group, Alston Investments Inc., which is also headed by Goldberg. At the time of the announcement the privately held company had 102 stores in Quebec, Ontario, Western and Atlantic Canada.

A liquidation order issued by a Quebec Superior Court judge on Nov. 15 indicated that Bouclair Inc. intended to close at least 29 of its stores.

Introducing Personal Banker – Finding Tax Credits for you, and more

In effort to provide you, the reader, with the truth about your tax arrears and dealings with the Canada Revenue Agency, it would be a disservice if I did not provide information about companies who can help in addition to companies who can harm.

Companies who can harm you include companies who want your dollars right away in order to maybe, possibly, provide you with a service, or who might instead take your money – tell you there is nothing they can do – and then suggest that you speak to a trustee.

That approach does not sit well with me. Never has. Never will.

What works for me if looking at a tax debt, or tax problem from all angles, and consider all approaches.

For example, some debts can be resolved through re-financing. I don’t do that. I do, however, work with a couple of mortgage brokers who take care of that service.

Other tax debts can be resolved through a filing, or re-filing of tax returns. Again, I do not do that, but I work with a couple of accountants who take care of that for you.

I don’t recommend bankruptcy or consumer proposals right away, however should the situation really warrant one, then I have a couple of firms that I could recommend.

In the process of helping someone with their tax matters, I always look at it in depth so that I can suggest the best plan of action for resolving it, and then let the Taxpayer decide the path they want to take. I don’t tell them. I suggest the options, and provide the steps for them to take in each scenario.

Recently, a firm called Personal Banker came onto my radar, so I met with the owners and absolutely love what they do and how they do it. They, like myself and my network, put the interests of the Taxpayer first and foremost and provide a service far more valuable that one could imagine.

Again, that’s my opinion.

What I like about Personal Banker is that they perform a function which I strongly recommend in the majority of the tax debt cases, and that is to have their previous 10-years worth of tax returns reviewed to ensure that all the eligible credits have been taken.

This is the best way to reduce a tax debt – if there are missing credits – because the experts at Personal Banker apply the credits, for a percentage of the findings, and you can either apply them to your tax debt, or take the money and run.

It’s brilliant.

What’s more brilliant is that this company operates Canada-wide, and are growing on a daily basis. There is a significant need for their services, and they’re doing this at rates far below the rates that I have seen in the industry.

Don’t believe me? Check it out.

If you think that there might be tax credits that you have not claimed, visit their website, sign up and let them do the rest.

If you’ve used them before, I’d love to hear your feedback in the comments, or emailed to me at info@intaxicating.ca

CRA Targeting Underground Economy Again (or Still)…

Recently saw a news headline relating to the Canada Revenue Agency (CRA) and collecting taxes, that caught my eye. The headline screamed something to the effect of; “Contractors buying from Home Depot beware — the CRA is coming after you.”

I immediately began to shake my head and wonder if what the purpose of this article was. Was it written in response to an action taken by the CRA, or was the headline intended to scare Canadians who are dealing in cash and not paying their tax, into using their services.

Afterall, this really is not news.

For as long as Canadians have found ways to evade paying taxes, the CRA has had to find ways to verify that taxpayers are reporting their accurate income – and reporting at all.

The latest instance came to light recently as the CRA sought information from The Home Depot, in July, using a provision in the Income Tax Act (ITA), known as the Unnamed Person Requirement (UPR).

The CRA obtained a Federal Court order (which they are required to do) which legally required the Home Depot to disclose the identities of their commercial customers as well as the total annual amount spent by each of these customers between January 1, 2013 and December 31, 2016, Canada-wide.

Certainly, there are some Canadian Contractors who work solely for cash, and the CRA will use this information with the information that has been filed by these individuals, to determine if an audit is necessary.

The CRA will likely move quickly in cases where there are clear discrepancies, such as contractors who claimed $1 in income, who appeared at the top of the Home Depot list, and who live in, or own, millions of dollars of assets. In these cases, the CRA would send a letter, followed 30-days later by an assessment, and the taxpayer has 90-days to appeal that assessment with facts. Facts, being supporting documentation such as proof, receipts, explanations, and bank statements to prove that nothing untoward had occurred.

I’m not going to lie when I say that in the almost 11-year working in the CRA and the almost 11-years since I left the CRA, I have seen pretty much everything. Some good, some really good, but some bad, and some really bad.

The fact that the CRA found this tax evasion is part of the bigger problem around tax advice being given to people from people who have no idea what they’re saying. As a result, the CRA has to jump in, assume everyone is lying, cheating and stealing, and paint everyone with the same brush.

It gets worse, if these tax evaders filed tax returns and lied about having no income and received benefits based on earning no income, when in fact they earned considerable amounts of income and then took benefits they were not entitled to received from hard-working Canadians who pay their taxes. In those cases, these tax cheats can expect the CRA and the courts to come down much harder on them.

When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

Didn’t shop at Home Depot? You’re not out of the woods yet. In addition to this list from Home Depot, the CRA also compiled lists of municipal building permits by way of seeking out unregistered building subcontractors. The review of 8,396 building permits yielded 2,751 unregistered building contractors.

According to a CRA report released in late 2018, underground activity in Canada totalled $51.6 billion in 2016, which could have gone into the tax coffers.

When seeking permission from the court to have the Home Depot hand over their records, the CRA stated that 7% of an unidentified company’s customers had were not filed up-to-date on their personal tax returns, meaning a greater chance of tax evasion (which people think, but again, is totally not true).

Many audit and collection projects within the CRA make use of unnamed persons requirements (UPRs), tips from the CRA’s Informant Leads Line (Snitch line) and from Canadians themselves who fail to file tax returns on time.

If you, or someone you know falls into this category, you are best to contact us at inTAXicating, to help answer questions truthfully about how much exposure you might have to the CRA and what solutions are available to help.

We can be reached at: info@intaxicating.ca

Canada Revenue Agency (CRA) Lien Questions Answered

There are many questions around writs and liens – each situation can be very different – but there are some commonly asked questions which pop-up when someone realizes that the Canada Revenue Agency (CRA) has registered a lien against their property.

Commonly asked questions:

  1. When does a lien have to be dealt with. A:When the property needs to be sold or refinanced. Unfortunately, many Canadians realize that the CRA has actually registered a lien when the property owner is attempting to sell or refinance their property, which is also the worst time to attempt to get the CRA to work with you.

2. Can I negotiate with the CRA? A: No, the CRA will not / does not negotiate tax debts. You can negotiate a payment arrangement under certain circumstances, and you can “negotiate” penalties and interest by applying to the CRA’s Taxpayer Relief program, but no other negotiations exist outside of bankruptcy.

3. Will the CRA remove a lien if I file for bankruptcy? A: No, liens survive bankruptcy.

4. Once I pay the lien amount, my debts to the CRA are done, finished, over? A: No, actually, the lien amount represents an amount owing in your account at the time the lien was registered. There is still interest accumulating on the debt (possibly other assessments too). Once the lien is resolved, there is the additional amount(s) which must be cleared up.

5. How can I get a lien removed? A: Great question! You can, provided you are doing so for a reason. If you need the lien removed in order to refinance because that re-financing will result in the CRA getting paid, then you might be able to have the CRA temporarily lift the lien to allow for that transaction to proceed.

6. Can I transfer the property out of my name / remove myself from title? A: NO, NO, NO!!! This is very dangerous because if you transfer an asset from your name into another person’s name when you have a debt to the CRA, or may have a debt to the CRA, and that transfer is for less than the fair market value, then the person who received that asset can be held liable for your tax debts.

7. Is the CRA going to act on the lien and kick me out of my house? A: No. If there was a lien on a secondary property such as a cottage for example, then the CRA might be prompted to take action and force a sale, but for a principal residence, no they are not.

8. If I leave it long enough, will it go away? A: Unfortunately no, unless you knew something about the way the CRA operates and there were specific criteria which applied to you and your financial situation.

Email Example

To help clear up some of the confusion around this topic, here is an email we received recently regarding a CRA lien. This email contains some common questions, along with some common misinformation.

Hopefully this example will help Taxpayers who have liens registered against them by the CRA.

Lien email.

Question: “When the CRA puts a lien on a property, we are advised to contact a lawyer. Why is that? Can we not get written confirmation from the CRA ourselves, that after the lien amount is paid, the lien will be removed within a set period of time?  If they agree to do it, do they just delay anyway or check whether they want anything else from you first?  Is this all true?”

Answer: There is a lot here, but let’s break it down into manageable pieces.

When the CRA registers a lien against a property – which is a regular CRA collections technique in order for the CRA to secure their debt – they know what the outcome will be.  As a result, while it might be a huge inconvenience, it’s usually not a concern unless the property is going to be sold, or if it needs to be re-financed.  In that case, the lien needs to be addressed.  Otherwise, the amount the CRA registers the lien for is the amount owing on the day the lien was registered and interest and possibly debt continues to accrue on the account.

The CRA cannot and will not provide confirmation that once a lien is paid that the lien will be removed because there might be additional debts which the CRA is going to need to register a lien for.  They prefer not to put things in writing which could come back to cause them problems collecting tax debts.

If, however, there is a just a tax debt, and the collector registers a lien and that lien is satisfied (paid) – that means the balance was paid in full through re-financing or selling the property.

The major problem that occurs here is that once a tax account is paid, that account is automatically removed from the inventory of accounts that the collector has – often without them knowing. This means they do not have the opportunity to remove the lien from the property and need to be reminded there is a lien in place so they can finish it up, remove the lien and close the account.

Otherwise, it can be very difficult to get a lien removed after the fact because there is no one assigned to it, and no one wants to take responsibility for working an account which is not assigned to them.

So if there is a lien registered and you pay it, make sure to follow up in a timely manner to ensure it’s been taken off.

Lien / Writ / Certificate Help

If you, or someone you know has a lien registered on a property that they own and are looking for suggestions, recommendations or solutions to resolve this, then look no further than inTAXicating Tax Services.

We can be reached via email at info@intaxicating.ca, to get the ball rolling.

Our services will cost you much less than you expected, and your results will be far greater than you could have imagined.