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

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.

 

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.

CRA Hires New Chief Service Officer. (It wasn’t me, but it should have been me!)

On November 1st, 2018, the CRA announced that as a result of complaints from the public related to “significant service delays”, they have launched a national consultation tour and on this tour will be promoting the appointment of a new Chief Service Officer (CSO).

That position should have been mine, but they never asked, so instead of helping the masses while working at the CRA, I’ll have to continue helping Taxpayers as inTAXicating.

While noting the introduction of a “new suite of services … leading to real results for Canadians”, or a return to the service that the CRA used to give Taxpayers, the CRA is admitting that it has a long way to go in the eyes of Canadians when it comes to providing anything related to “Customer Service”.

In March of 2018, the CRA appointed its first CSO, Mireille Laroche who happens to be a bilingual career public servant with a background in and who previously worked at the Department of Finance.

So much for the CSO helping Taxpayers with Collections issues related to the CRA because for that to happen, the CSO would need actual time working in, you know, Collections.

That being said, the CSO be classified as an Assistant Commissioner of the Service, Innovation and Integration Branch, as well as Chief Data Officer.

The Minister of National Revenue, the Honourable Diane Lebouthillier, has visited a number of remote locations over the past year to discuss service issues promising solutions, but none have come from the CRA.

Stated “improvements” coming from the CRA include; the opening of the Northern Service Centres in territorial capitals, an enhancement of the CRA’s digital services, and the implementation of a new call centre platform because the one they currently use doesn’t meet the needs of Canadians.

A CRA spokeperson stated that, “these service enhancements will address many of the frustrations Canadians have experienced when they interact with the CRA [and] while they will be of significant benefit to Canadians, they are really just the beginning of the CRA’s client-focused approach to service.”

To that statement, I disagree!  I think the public wants to be able to sit down with their Collections representative face-to-face and that the CRA’s insistence of moving collections files to these “hubs” has created additional confusion, unnecessary stress and assessment which would have been resolved in person previously.

In addition to launching both online and in-person public consultations, the CRA is holding a series of “design jams,” which, according to the CRA spokesperson, is “a collaborative brainstorming activity used to solve design problems. It is part of the ‘design thinking toolkit.’ Design jams produce prototypes, pitches, or proposals; it is the equivalent of a ‘hackathon’ but for designers. The focus is on stakeholder and participant empowerment. Rapid ideation is done with all stakeholders involved.”

Time will tell if there will be actual changes being made to the way the CRA interacts with Taxpayers, or if this is just another way for the Federal Liberal government to spend taxpayer money while touting all the “progress” that has been / will be made.

Tax Debt, Tax Arrears, Taxes Owing to the Canada Revenue Agency (CRA). Call it what you want, but it is ruining your life!

Do you have tax debt to the Canada Revenue Agency (CRA)?  Tax arrears causes stress each and every day on you, your business and your family? Even if you are in an arrangement with the CRA, they can change their mind on a moments notice and want more.  Knowing that the CRA can take all your money, or close your business at any time for your Tax Debt cannot help you sleep at night…

Everybody has answers for you which best suits themselves or their business.

We have a solution that best suits you and your business.

It’s called the Debt Diagnosis, and it’s a service we provide that no other tax solution / tax resolution / tax negotiator can provide.

Our Debt Diagnosis Program looks at the specifics of your CRA debt, your other debts, your current compliance situation, your assets, liabilities, ability to pay, and a whole bunch of other factors and we provide you with your options, suggestions and recommendations regarding how to proceed with your CRA debt(s).

We’ll advise you about options – options you know about already, like the CRA’s Taxpayer Relief Program, and the CRA’s Voluntary Disclosures Program – and we will tell you about options you don’t know about, and you won’t find in writing, because the CRA doesn’t want you to know about them.

As a former CRA Collections Senior Officer – who spent almost 11-years collecting primarily business taxes – GST/HST, Payroll, Corporate Tax, and Personal tax – and managing CRA Collections staff – I understand Director’s Liability, Non-Arms Length Assessments, Write-Off’s, Payment Arrangements, Taxpayer Relief, and everything else to do with collections better than anyone!

I created the Write-Off checklist that many CRA office’s use to write off their accounts.

I have resolved files that the CRA never thought they would collect on, while I was working at the CRA, and working outside the CRA.

Knowing the ins and outs of the CRA’s Collections division helps you!

Remember this: Getting in to Tax Debt takes time. Getting out of Tax Debt also takes time!

If someone is offering you a quick solution, then they are trying to get you into Bankruptcy, or filing a Consumer Proposal.  Insolvency firms are creating “tax” centres to “help” you with your tax debts.  They offer prompt resolution of CRA Collection actions, such as; Requirements to Pay and Wage Garnishments because if you go bankrupt the CRA cannot collect their debts… Most of the time.

Learn what options you have, which are specific to your Tax Debt / Tax Compliance matters.

The CRA has options available for Taxpayers who cannot pay their debts.

Use those, instead of trading Tax Debt for Credit Problems.

Talk to us at inTAXicating!

Find us @ http://www.inTAXicating.ca

Email us at info@intaxicating.ca

Learn the plan to take control of your Tax Debt, and all your other tax-related / debt-related issues and get moving in the right direction today.

There is no need to run to a trustee.

Or spend thousands and thousands of dollars to a firm who is going to promise solutions – tell you the CRA won’t budge on their position – and then tell you that the best option is to go bankrupt.

Get started on resolving your tax debt(s) today.  The CRA still works in the summer!

http://www.inTAXicating.ca

 

Frequently Asked Tax Question Answered: How do I know if what I read about Tax Debt to the CRA is true?

This is one of the most commonly asked questions of me: How do I know if what I read on the Internet regarding debt to the Canada Revenue Agency (CRA) is true or not?

The answer is quite clear, however, complicated at the same time.

If you owe money to the CRA and you are looking for options, suggestions, or tips on the Internet, you have to pay special attention to the “Solution” options which are advertised as if they are providing legitimate advice.

The most important thing to do is to take note of the terminology used in these ads – over and over again – because the intention of these ads and blog posts are not to help you but to achieve a high SEO (search engine optimization) ranking.  These posts are written to capitalize on the number of eyes who will read that post because of the way it was written, not because it was intended to provide help to you.

Here is an example of a fear mongering ad, disguised as an article on taxes, meant to “help” you.  I am paraphrasing the content, but the example should provide a clear clue as to the true intention of the poster.

Title: Understanding Canada Revenue Agency (CRA) Tax Assessment & Arbitrary Assessments

The sample post: CRA tax assessment is when the Canada Revenue Agency conducts a review of your income taxes. The most common form of CRA tax assessment is the Notice of Assessment that is sent once the CRA has conducted a preliminary review of your tax return. There is another CRA assessment known as “arbitrary assessments.”   These assessments are also known as “notational assessments.” What this means is that, if you have not filed your taxes on time, the CRA could decide to complete and file your return for you.

Many people believe that, if you do not file your taxes, that the CRA will wait until you do file your taxes and then the CRA will penalize you by changing you penalties, fines, and interest.

This is not always true.

The CRA is able to choose to complete an arbitrary assessment in which the Canada Revenue Agency will estimate your income and the tax debt that you owe and then the CRA will charge interest on this debt as required.

The amount of tax debt that comes from a CRA arbitrary assessment will  not be as favourable to you as it would be if you completed your return yourself.

The CRA will use previous income tax statements to complete your return and will not take steps to include expenses or deductions or attempt to give you any tax breaks.

In many cases, the amount owing listed by the CRA will be very high and additional charges, penalties and interest will be charged since the assessment was late.

You will then be subject to CRA collection efforts such as a wage garnishment of up to 100% of your income, or the CRA will empty your bank account and then freeze it so you cannot use it.  They could also put a lien on your house and if you don’t pay them, sell it and keep the proceeds.

What do you do if you Receive a Notational Assessment?

If you receive an arbitrary CRA tax assessment, your options are;

  1. Pay the amount listed
  2. File an appeal of the assessment.
  3. You can also choose to file a return yourself at this point in an attempt to reduce your tax bill, but, this will trigger a CRA audit to ensure that your tax return is filed correctly.

In addition, if the CRA does not have the information it needs in order to complete an arbitrary assessment, it can take you to court where the court can order that you complete the return and pay a court fine.

If you ignore this court order, you could be subject to contempt of court charges and go to jail.

As you can see, your best option is to contact us, and we will help solve this problem.  We have an army of former CRA staff at our disposal who deal with hundreds of these daily.

Let us help keep you out of jail and away from the prying eyes of the CRA.

 

WHEW.

After reading this, if you were not afraid of the CRA, you must be by now.  This blog post started out trying to get people looking for CRA tax solutions and slowly wound its way through a series of lies and mis-truths and took the reader straight to audit and jail.  It just stopped short of proclaiming that King Tax Man was going to descend from the clouds and throw tennis sized hail-balls at you.

This type of article is not good.  It’s not accurate, heck, some of it is not even true.  But how would you know?

What are the red flags that you should notice?

Let’s break down this article and address some of the “facts”.

First paragraph – mentions of CRA, or Canada Revenue Agency – 5 times.  This is their SEO target, clearly.

I was also alarmed that the writer was unable (or unwilling) to state what a Notice of Assessment (NOA) is, and how the CRA actually issues them.  To set the record straight, a Notice of Assessment is the computer generated form which is issued once a change occurs on someone’s tax account.  This NOA carries with it a legal warning from which the CRA are able to take collections actions.

An additional lie occurred when the author stated that your tax return is looked over once it is filed.  In truth, no one has reviewed your tax return.  The data entry group take the paper-filed returns and just enter the information in the system.  Electronically filed tax returns are run through a program aimed at identifying any obvious errors or inaccurate deductions taken.

There is the idd case where the CRA will flag and wait for your tax return, however try not filing for 20-years and being under audit regularly, and then you can get to that level.

Canada’s tax system is a self-reporting system so the information is accepted as filed, and the Audit, or Verification department are responsible for checking the information to make sure it is correct after the fact.

Another HUGE issue, is that there is a significant difference between an arbitrary assessment and a notional assessment.

Arbitrary assessments are issued for personal (T1) taxes and occur when the CRA’s non-filer group, or a CRA collector takes information on your personal tax account for that current year, plus previous years and prepare the unfiled tax return for you, less deductions.

In many cases, they are pretty accurate.

A notional assessment is specific to GST/HST and in these cases the non-filer unit or the collections unit will assess an amount owing for each period outstanding based on a suggested amount the system provides.  That suggested amount is a combination of the previous filings, and the industry or SIC code that is associated to your file.

In both cases, returns can be filed and the assessments removed, however, Notices of Objection should be attached just to provide recourse should the filings not be accepted.

Filing the missing returns does not trigger an audit.

The whole piece about the CRA taking you to court, etc., makes absolutely no sense as it’s not even true.  Arbs and Notionals are based on information in the CRA’s systems.  If the CRA doesn’t have information, they can still raise an assessment.

I suspect the writer was just trying to close out the reasons for using them by tieing in the jail / court fine, for not complying.  It’s not true at all, but it makes for a compelling story!

If the intention of the article was to really assist Taxpayers and let each and every Canadian decide if they want to pay for assistance / expertise, then all they had to do was discuss prosecution which is what the CRA can and will do if repeated attempts to file have been issued from the CRA (Demand to File) and have not produced the returns.

Maybe they didn’t know that existed…

Maybe they were not aware that failing to file is a criminal offense, if the CRA asks for the returns and they are not provided.

Certainly, they did not want you to know that failing to pay is not.

If someone looked at the above post, they would panic, contact this firm, and likely be convinced to pay a lot of money for something they could likely do themselves because they don’t want to make it worse, or go to jail.

It’s hard to get the truth out there when there are people and firms distorting the facts in order to make a profit off of taxpayers lack of understanding of how the CRA works.

Additionally, if they intentionally muddled the facts in this post to scare you into using their services, what other information have they creatively adjusted?

Or, if they believe this to be the truth, then they just don’t have the experience or expertise to know better, and do you really want to use them to represent you in dealings with the CRA?

Outcome:

I questioned the author in an online social media forum.  I said, “I’ve always understood that an arbitrary assessment was specific to T1 returns and that they were actually quite accurate because most of the information used is already posted to your T1 account, whereas a notional assessment was specific to GST/HST and those figures were based on the industry or SIC code. Can you confirm this is your understanding as well?”

He never responded…

Surprised?

I’m not.

When you have CRA tax collections problems then you need the expertise of the firm with an actual former CRA tax collector.  inTAXicating Tax Services.

Visit us at http://www.inTAXicating.ca

You Filed Your Tax Return to the CRA. You Owe CRA Money. Now What?

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.

http://www.intaxicating.ca

CRA Problems? Here is what you need to do!

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Do you have problems with the Canada Revenue Agency (CRA)?

Do you owe the CRA money?

Are you behind on your personal (T1) tax filings?

Are you a business owner and you have fallen behind on payroll, GST/HST or Corporate Tax (T2) returns?

Has the CRA registered a lien against a property you own?

Have you transferred and asset and the CRA is assessing a 3rd party for your debts?

Are there garnishments on you bank account or against your wages?

Do you own a business and the CRA is contemplating Director’s liability?

Is the CRA taking you to court, and you just don’t understand if you have a case or not?

Does any of this make sense to you?

It’s complicated, it’s time sensitive and it’s extremely frustrating that the CRA would rather force you, or your business into bankruptcy that work with you, isn’t it?

Here is what you need to know before you can do anything to solve these problems:

  1. If you search online using any keywords related to CRA, tax, debt, or urgency, you might wind up here (you can thank me later), or you might wind up at a trustee.  Bankruptcy firms have covered the internet with keywords aimed to make you think that the best and only option for you, is bankruptcy or a consumer proposal.  While it might be, there are SO many other options!!!  You don’t need a trustee to put you in bankruptcy in order to remove a RTP, when asking the CRA to remove it might be the way to go.
  2. Just like the phone scams claiming to be from the CRA, or wanting to clear your ducts, there are many “Tax Solutions” firms out there disguised as your ideal solution, when they want your money, your trust and then you accept their advice that bankruptcy is the best option for you.  You can identify these firms this way:
    1. They buy followers on Facebook, Twitter and other social media accounts they operate.
    2. They write blog posts not intended to help you, but to scare you.
    3. They refer to the CRA as being bad, evil, and as the “Tax Man.”  That approach is proven to never work.  Even if you detest the CRA, telling them that won’t help your case.
    4. They hide their true intentions; either that they are part of a Trustee in Bankruptcy or by calling themselves fun names, to distract you from who they are and who the owners are.
  3. You need to know what the CRA wants from you, and how to go about fixing it.  If you don’t know how the debt came about or what the CRA can, will, or have done to you already, then you cannot fix it, or have someone fix it for you, and,
  4. You need to know what will happen to you / your company / your family, in the instance where you decide to; do nothing, pay the balance, file the returns, fully comply with the CRA or choose bankruptcy / consumer proposal.

Without knowing answers to the above 4 questions, you cannot properly fix your tax problems once and for all.

If the “solution” to your 5, 10, 15 or 20-year tax problem can be fixed in one meeting and for a fee, what exactly are you getting?

Tax problems that take years to establish, sometime take years to resolve.  Considering some of the alternatives, it’s worth it to know that your CRA problems have been resolved and you are not exchanging a CRA tax problem for a bankruptcy / consumer proposal problem.

Ask, before you begin.

info@intaxicating.ca

Tell us about your tax problems, and let us tell you what the best option for YOU is.  If the solution can be achieved through a simple action which you can do, then you get moving on it.

If it requires some expertise or assistance, then leave that up to us.

Former CRA Collections expertise to help you when you need it the most!

 

 

What’s New For 2018: CRA

The Filing deadline for your 2017 Personal Tax Return (T1) is April 30th, 2018.

While most Canadian income tax and benefit returns for 2017 are due on April 30, 2018, if you or your spouse or common-law partner is self-employed, you have until June 15, 2018.

You can file online as early as February 26, 2018.

Filing early ensures your benefit and credit payments are not delayed or stopped.

If you have a spouse or common-law partner, they should also file a return early.

The benefit and credit payments include (Link to CRA website included):

This year, the Canada Revenue Agency is making it easier for paper tax filers to do their taxes by mailing them their forms and guides directly.

Want your tax refund faster?

You can register for  the CRA’s direct deposit, and receive your income tax refunds and benefits quickly and securely, however, if you provide the CRA with your bank information AND fall into tax troubles, the CRA can, and will, use that bank account to freeze or seize the money in it to pay off the debt.

Additionally, there are some new changes which can impact your tax return, some of which include;

Medical Expense Tax Credit for Reproductive Expenses

The medical expense tax credit provides relief for individuals who have paid significant medical expenses for themselves or certain dependants.  This credit is non-refundable credit and is intended to reduce taxes owing.

Effective for 2017, amounts paid for reproductive technologies for the purpose of conceiving a child can be claimed as a medical expense tax credit, even if the individual does not have a medical condition preventing them from conceiving a child. Previously, the medical expense tax credit was available if the use of the reproductive technologies directly related to a medical infertility condition.

A request can be made to the Canada Revenue Agency to claim reproductive technologies expenses unclaimed in the last 10 calendar years.

Certification of Disability Tax Credit Certificate

The Disability Tax Credit program provides relief for individuals who have a severe and prolonged impairment in physical and mental functions by providing a non-refundable tax credit that can reduce taxes owing.

As of March 2017, nurse practitioners and medical doctors are allowed to certify Form T2201, Disability Tax Credit Certificate.

Federal Public Transit Credit

After June 30, 2017, amounts paid for eligible transit passes no longer qualify for a non-refundable tax credit, however, you can claim a non-refundable tax credit in your 2017 income tax and benefit return for eligible transit passes paid from January 1, 2017 to June 30, 2017.

As a result of the changes made to the Federal Public Transit Credit, the Ontario government introduced a new refundable tax credit effective July 1, 2017, and to be eligible to claim this credit, you must meet the following criteria:

  • Be 65 years of age at the beginning of the year;
  • Reside in Ontario at the end of the year; and
  • Paid for eligible transit service from July 1, 2017 to December 31, 2017 (receipts should be retained).

The maximum refundable credit that can be claimed for 2017 is $225. For subsequent years, the maximum refundable credit is $450. Visit the Canada.ca site here, for additional information.

Tuition, Education and Textbook Credit

Effective January 1, 2017, the Federal, education and textbook credits were eliminated, however, any unused credits from previous years can be carried-forward.

As a result of the 2016 Ontario Budget, changes were made to the Ontario tuition and education non-refundable tax credits. Credit is available for eligible tuition fees paid for studies before September 5, 2017. In addition, credit for the education amount is available for months of study before September 2017. Unused credits from previous years can be carried forward.

FILE

Of most importance is that you must file that tax return on time to the CRA.  If you have a habit of being late, the CRA will increase the amount of the Late Filing Penalty (LFP) year-over-year, and they multiply that percentage against the amount of taxes owing.  There is not limit to the amount of penalties which can be charged, and the most I have seen is 93%.  That is a LOT, and it’s in addition to the taxes owing!

If you need assistance with anything discussed above, or if you require more details, or have CRA debts, you can reach us at info@intaxicating.ca for your coast-to-coast CRA Collections expertise.

Visit our website, http://www.intaxicating.ca.

Statute of Limitations for Tax Debt: Canada

Statute of Limitations for CRA Debts – Truth vs Myth

There is a common belief that there is a statute of limitations on tax debts and that taxpayers can ride out these periods and ultimately pay no taxes.  Google it, and you will see all kinds of information out there, but it’s the Canada Revenue Agencies information which matters the most.

A Collections Limitation Period (CLP) is the time in which the Canada Revenue Agency (CRA) can begin actions to collect a tax debt.

Myth: After the CRA issues a notice of assessment, it has either 6 years or 10 years to collect the debt. If you don’t pay what you owe within that time, the CRA can no longer collect the debt.

Fact: Each tax debt has a 6 or 10 year collections limitation period (depending on the tax) and the limitation period can be restarted or extended by the CRA when certain events occur.  At that point, the total amount of time that the CRA has to collect the debt will be longer than 6 or 10 years.

Even after the collections limitation period ends, you can still have a tax debt and interest will continue to accrue until the tax debt is paid in full.

 

Start of the collections limitation period

The limitation period starts on the date that a notice of assessment or reassessment is sent, or 90 days after that date, depending on the type of tax debt.

 

Types of tax debt

The collections limitation period start date and duration will be different depending on the type of tax debt. Some tax debts are subject to collections restrictions, while others are not.

The following are some of the most common types of tax debt:

 

Individual (T1)

The Collections Limitation Period (CLP) starts on the 91st day after the CRA issues the notice of assessment – unless there is an objection filed.  There is a 10-year CLP on T1 debts which can be re-started and extended by the CRA.

 

Corporate (T2)

The CLP starts on the 91st day after a notice of assessment or reassessment is sent unless a NOA or appeal has been filed.  The 10-year CLP applies, however the CLP can be restarted and extended.

 

Large Corporations (as defined by the Income Tax Act)

The CLP starts on the 91st day after a NOA or reassessment is sent.   The 10-year CLP applies, however, the CLP can be restarted and extended.

This type of tax debt is subject to a 90-day collection restriction for the period after a notice of assessment or reassessment is sent, however, the CRA can act to collect 50% of the amount owing by a large corporation as soon as a notice of assessment or reassessment is sent.  The CRA can start collection action on the 91st day for the remaining 50% of the amounts owed by a large corporation, unless a notice of objection or appeal is filed.

 

Payroll (T4) Deductions

The CLP starts the day after the Notice of Assessment is sent.  There is a 6-year collections limitation period, however this CLP can be restarted and extended at any time.

NOTE: There is no collections restriction on Trust funds, so the CRA can begin collections actions the day after a Notice of Assessment has been sent.

NOTE: If a Notice of Objection or an appeal has been filed, the CRA can continue to collect the debt(s)

 

GST/HST

The Collections Limitation Period starts the day after the Notice of Assessment is sent and while the 10-year CLP applies, it can be re-started and extended at any time.

NOTE: Additionally, since GST/HST are also Trust Funds (funds held in trust for the Crown), there is no collection restriction once the Notice of Assessment has been sent.

NOTE: If a Notice of Objection or appeal is filed, the CRA can continue to collect the debt(s).

 

Collection Restriction Period

For tax debts subject to collection restrictions, the CRA cannot start collection action:

  • during the 90 days after a notice of assessment or reassessment is sent
  • during the time that you dispute your debt by filing a notice of objection or appeal

However, if the CRA determines that it might not be able to collect a tax debt because of collection restrictions, it can apply to the Federal Court (Canada) for a jeopardy order.  If granted, this order will let the CRA take collection action immediately.

 

Restart of the collections limitation period

The limitation period is restarted when either you or the CRA takes certain actions. Tax debts subject to the 6-year limitation period are restarted for another 6 years and tax debts subject to the 10-year limitation are restarted for another 10 years.

The following are examples of actions that will restart the collections limitation period. This is not a complete list.

 

Actions you initiate

The collections limitation period will restart when you:

  • Make a voluntary payment
  • Write a letter to the CRA proposing a payment arrangement
  • Offer to provide security instead of paying the amount owed
  • Make a written request for a reassessment of an amount assessed
  • File a notice of objection with the CRA
  • File an appeal with the Tax Court of Canada
  • Ask the CRA if you can make pre-authorized debt payments

 

Actions the CRA initiates

The CRA takes various actions to collect tax debts when taxpayers don’t make voluntary payments.

The collections limitation period will restart when the CRA:

  • Issues a garnishment or statutory set-off to collect an outstanding tax debt when you don’t make voluntary payments
  • Applies a refundable credit to your tax debt and notifies you by sending a letter or Statement Of Account
  • Issues a NOA or reassessment against a third party for amounts you owe
  • Certifies your tax debt in the Federal Court of Canada
  • Initiates seizure and sale action to collect your outstanding tax debt

 

Extension of the collections limitation period

The events listed below can extend the collections limitation period. When this happens, the clock stops running on the date that an event begins and it will not run during the event.

This has the effect of stalling the collections limitation period.

When the event is completed, the collections limitation period resumes where it left off.

Other events can then restart the limitation period.  It will end when the 6‑year or 10-year limit has been reached, even if it took more years than that to reach that limit if you include the stalled time.

The following events can extend the collections limitation period:

  • You file an assignment (bankruptcy or proposal) under the BIA, CCAA or FDMA.
  • The CRA accepts security instead of payment of a tax debt.
  • You become a non-resident of Canada after the CRA issues a NOA or reassessment.
  • The CRA postpones collection action without accepting security for an objected or appealed GST/HST debt. This applies only to GST/HST tax debts assessed under the Excise Tax Act.
  • You file a Notice of Objection with the CRA. This will extend the limitation period only for tax debts subject to collection restrictions.
  • You file an appeal with the Tax Court of Canada. This will extend the limitation period only for tax debts subject to collection restrictions.

 

NOTE: Filing a Notice of Objection with the CRA or an appeal with the Tax Court of Canada will restart the collections limitation period for all types of tax debts because both of these actions are considered acknowledgments of debt.

Similarly, if your tax debt is subject to collection restrictions, filing an objection or appeal will extend the collections limitation period.

 

End of the collections limitation period

Once the period ends, the CRA cannot take any further action to collect the debt, however, the tax debt still exists and you can make voluntary payments.  Voluntary payments you make after the limitation period ends will not restart it.