Tax time is upon us, and our team of insolvency professionals at BNA Debt Solutions is gearing up for yet another busy season of helping Albertans with their Canada Revenue Agency (CRA) debt. We’ve been working on CRA files for over 20 years, giving us plenty of experience in advocating to the federal government on behalf of our clients.
Owing debt to the CRA is a very different experience than typical creditors and they can be far more aggressive in collecting what is owed. They always have your latest contact information (making them nearly impossible to avoid), and they have stronger collection mechanisms than a typical creditor. For example, they don't have to go to court or serve you with a Statement of Claim the same way a typical creditor does. They can register a lien on your property that is the same as a mortgage, and they can garnish CPP and any incoming tax or GST refunds.
The 2020 tax year is going to add a new wrinkle for many Canadians in the form of CERB repayments. Any income collected in a year, even if it comes from the federal government, is eligible for taxation. That means that if you received CERB or EI in the past year, the CRA will collect income tax on it.
This is compounded by recent news that any wrongfully (or mistakenly) collected CERB monies will also have to be repaid. As we stated in a previous blog, there are a lot of unanswered questions regarding the CERB situation. However if you have received notice that what you collected needs to be paid back, and you have no means of doing so, talking to our team could be in your best interest.
Long story short, it is very difficult to hide or avoid the long arm of the federal government. So if you are facing a federal tax or benefit debt that is out of your realm to pay, it is in your best interest to talk to a Licensed Insolvency Trustee at BNA Debt Solutions.
Working with an insolvency professional
When it comes to working with a Licensed Insolvency Trustee about your tax debt, our team has put together a few tips and guidelines to help you get started on the right foot.
- If you owe and can’t pay, talk to us
There’s no point in you struggling to make payments to the CRA that you won’t be able to sustain. If your tax debt is an unmanageable strain on you and your family, a Licensed Insolvency Practitioner can help you get out from under tax debt with a consumer proposal.
- File your taxes on time
If you expect to have tax debts, you must file before the tax deadline or you can expect to have interest and penalties start to accrue on your account almost immediately. It does not serve your best interest to delay filing, as you will only ring up a larger amount to repay.
- Seek professional help
If your tax returns are complex, it is best to work with a tax professional, then bring in the results to our team. While we work to resolve tax debts, we are not income tax professionals.
- Make payment arrangements
If you are owing to the CRA after you filed your taxes, it will serve you to make payment arrangements right away. If they have an idea of when they will be receiving payments, they tend to be less aggressive in collecting.
- Keep copies
Always keep hard copies of your tax paperwork for at least 7 years. We encourage our friends to keep their tax records secure and organized in envelopes.
- Paper filing
If you have large deductions like medical or moving costs, you can expect that the CRA will audit you. It may be in your best interest to consider paper filing which allows you to send in all of your proof and receipts.
- Prepayment options
If you know you are going to owe (likely because you are self-employed) you can prepay your taxes during the year to soften the blow at tax time.
Hanging onto your receipts and having a good understanding of what can be deducted will be a big advantage to you. Also, if you know you missed some deductions on the previous year's filings you can amend your return for up to 10 years.
Owing the CRA or federal government is nothing to be ashamed of. Thousands of Canadians wind up feeling the squeeze for many different reasons, so please believe us when we tell you that you are not alone. We’ve helped countless hard-working Albertans with their tax debt, and we encourage you to read their success stories to give you the understanding that we can help you too. If you’re ready to get the taxman off your back, we’re ready to help. Contact us today to get started.