With the tax deadline now behind us, those Canadians who received a Notice of Assessment outlining a tax debt may be a bit stressed about what’s to come. When you owe money to the Canada Revenue Agency (CRA), as with any other creditor, you can bank on them coming to collect. However, unlike your other creditors, the CRA won’t wait – they want their money, and they want it as soon as possible. If a tax collector has contacted you, or you’re concerned about an impending communication, here’s what you need to be aware of.
Firstly, if and when a tax collector gets in touch, you always need to be on guard. As mentioned, when you have a tax debt, the CRA will be looking to get that money as soon as possible. They are not interested in a long-term payment plan, and attempting to negotiate one will typically end in disappointment. While there are variances and each agent negotiates based on their own opinions, there is absolutely no way to bank on obtaining a reasonable timeline for repayment. Just because your neighbour got lucky and negotiated a 1 year term, that doesn’t mean you will too.
Financial disclosure. One of the first things a tax collector will ask for when they contact you about money owed is for full financial disclosure. This usually means filling out a form which includes any and all income, assets, banking information, etc. While this may seem harmless, it is actually their first step in discovering where to best apply pressure for collection action. For example, if you disclose significant assets, the CRA may encourage you to borrow against said assets in order to pay the debt. If this isn’t financially feasible, you could be in significant trouble.
Once you’ve disclosed this information, you may also face disastrous enforcement action, such as a wage garnishment, frozen bank account or property lien, all of which can seriously impact your financial stability and have long-lasting impacts on your financial well-being.
The best thing that you can do if a tax collector has already contacted you, or if you’re concerned that this will happen in the future, is to pay the debt, in full, as soon as possible. However, if this is not an option, you are best served by speaking with an experienced tax professional, one who can explain the various options available to you and to ensure your protection. You are better off having them negotiate on your behalf.
Think about it this way: while you may be able to read all about performing a frontal lobotomy yourself, that doesn’t mean you should do so. We may not be brain surgeons, but we know the ins and outs of the Canadian tax system and can help you navigate these dangerous waters. Tax Solutions Canada has your back. Call us today to find out how we can help: 1-888-868-1400.