Many, many Canadians struggle with tax debt, so if you are one of them, you are not alone. When you have a tax debt that resulted from a late tax filing(s) or a re-assessment of a misfiled return or taxes owed from an audit of a past return, CRA interest and penalties can cause the size your tax debt to grow incredibly large.
A tax debt that you would have otherwise been able to pay can suddenly become so large from CRA interest and penalties that it is impossible to pay it (and in the time lines CRA wants). While most people are honest, the CRA treats everyone the same. So even if you made an honest mistake it will result in you feeling like a criminal.
When you owe money to the CRA they must demand to be paid in full. They will seldom agree to a monthly repayment plan when individuals try to negotiate with them directly. Why? Because there is a schedule in the Income Tax Act and the Excise Tax Act for how and when taxes must be paid. If the CRA was too easy in giving out payment plans the fairness of the tax system (and the Government’s cash flow!) would be destroyed. The CRA frequently starts discussing a temporary payment plan with you and use good cop/ bad cop tactics to get you to disclose personal and financial information that they later use against you. Once you have said or shown something to the CRA you cannot take it back, it can be misunderstood by the CRA and used as evidence against you – making your problem worse. In our collective years of experience the most difficult cases for us to handle are those where an amateur has already butchered the matter and shot holes in their own feet.
If you are in this situation, and while it can be stressful, know that it’s not hopeless. There are programs available that can eliminate CRA penalties and sometimes CRA interest and penalties.
One such program available through the CRA is the Taxpayer Relief Program. Under the Taxpayer Relief Program the CRA may cancel some or all of the CRA penalties and interest that they have assessed on a tax debt. If CRA penalties are reduced it will result in an overall reduction of both CRA interest and penalties because the interest will be eliminated on the penalties that are cancelled, retroactively.
There are only a few primary reasons that individuals qualify to have CRA interest and penalties reduced or removed:
- Extreme financial hardship
- Health issues – including addiction and mental health issues
- A natural disaster like a fire or flood
- An error on the part of the CRA
How these primary reasons are presented and supported are critical. It does not work on a trial and error system. If the penalties and interest are a large amount for you you will likely need a person experienced in these matters to guide you.
If you think that you have grounds for taxpayer relief, it is important to proceed with representation. The Taxpayer Relief Program application process is an official one and if you want to have a shot at having relief of CRA interest and penalties granted you will have to provide substantial evidence and documentation to support your application. Some will be relevant, but some will not, which is why it is so important to have a professional prepare your application for you – it will simply improve your chances at success.
Properly taking advantage of programs like the Taxpayer Relief Program may enable you to get rid of CRA interest and penalties and will enable you to come up with a solid plan to put an end to your tax problem.
To see if you qualify under the Taxpayer Relief Program or to see what other options you may have please visit www.taxsolutionscanada.com or call 888-868-1400.