All debt can be overwhelming, but there’s no creditor quite as intimidating as the Canada Revenue Agency or CRA. This is why unfiled and/or unpaid taxes are two of the most common reasons self-employed individuals and sub-contractors seek the assistance of a Licensed Insolvency Trustee.
The bottom line is if you have not filed taxes for several years or your tax debt is severely delinquent, you’re on CRA’s radar. The longer you avoid dealing with the situation, the worse it can get.
What could happen if you haven’t filed your taxes or haven’t paid what’s owing? The CRA will garnish your wages, freeze your bank account, seize assets or worse.
Wage garnishment is typically one of the first steps CRA will take to recover tax debt from employed individuals. Your employer will receive a Garnishment Order which they must abide by, usually requiring them to withhold 30 percent of your wages for remittance to CRA. Though, this is often a best-case scenario, as CRA has the power to garnish up to 100 percent of your wages.
Freezing bank accounts is one of the most effective tools CRA can use to bring you to the bargaining table and convince you to pay your outstanding taxes. CRA may issue an official Requirement to Pay to your bank, which your bank must abide by. Not only will you be denied access to the funds in the account(s), but CRA can also seize these funds and continue doing so until you’ve either repaid the debt or made other payment arrangements.
Do you own a home or a building for your business? If so, your property may be at risk. CRA can register on title to your property — and nothing, save for repaying the debt, will remove them from title. This could force you to sell the property to pay the outstanding taxes. It’s one thing to be nonchalant about taxes when you have nothing to lose. But when your property is at risk, the right advice is essential. A qualified professional can advise you on your options, before CRA registers a lien against any property you own.
Act immediately at the first sign of issues with your unfiled or unpaid taxes and schedule a Free Confidential Consultation with a Licensed Insolvency Trustee. Together, you can review your situation, discuss your challenges, learn your options and create a plan to tackle your debt — ideally before CRA ever gets involved. A Licensed Insolvency Trustee can identify solutions and strategies to help reduce the stress and worry of outstanding tax debts and give you much-needed peace of mind.
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