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Filing taxpayer relief

What You Need to Know Before Filing Taxpayer Relief

If you are having difficulty repaying your tax debt, you might be looking for help. You may have heard that the Canada Revenue Agency (CRA) has a program exactly for this situation: the Taxpayer Relief Program. However, before filing taxpayer relief, it’s important to understand everything about this program. After all, tax debt is a serious issue and it’s one that you’ll need to make sure that you deal with properly.

The CRA is powerful and, if you don’t pay your tax debt, you could end up in a pretty serious situation, so you’ll want to know all of the pros and cons of the program before proceeding.

What is the CRA Taxpayer Relief Program?

Before filing for taxpayer assistance, you’ll need to understand the program. CRA taxpayer relief provisions are designed to potentially:

  • cancel or waive penalties or interest;
  • accept certain late, amended, or revoked elections;
  • refund or reduce the amount payable beyond the normal three-year period.

At first glance, it appears that registering for taxpayer relief is a obvious choice. However, this will depend on your particular situation. When it comes to CRA taxpayer relief, there are a lot of factors to keep in mind.

Possible Negatives to Filing Taxpayer Relief

The first thing that you will notice is that the taxpayer assistance program only potentially reduces, waives or cancels penalties and interest charges. It does not reduce the overall amount that you owe. The CRA will never reduce the amount that is owed to it. In the agency’s eyes, this money is owed and it must be repaid.

In addition, the CRA does not grant relief from penalties or interest charges easily. It wants people to understand that there are consequences to filing or paying late. Therefore, the CRA will only consider cancelling or waiving penalties and interest charges in the following situations:

  • Extraordinary circumstances
    • This includes situations such as floods, fires, and other natural or human-made disasters, as well as civil disturbances, service disruptions, serious illnesses or accidents, or death in the immediate family.
    • If one of these situations applies to you, then filing taxpayer relief may result in cancelling or waiving penalties and interest charges.
  • Actions of the CRA
    • If penalties and interest charges were charged largely due to the actions of the CRA, then filing taxpayer relief may lead to these penalties being dropped.
    • This applies to situations such as CRA errors, errors in processing, or delays in providing information that result in taxpayers being unable to meet their tax obligations in a timely manner.
  • Inability to pay or severe financial hardship
    • If you are in a very difficult financial situation, and paying the penalties or interest charges would make it impossible to afford the basic necessities of life (for example) the penalties and interest charges may be reduced or cancelled.
    • The CRA requires full financial disclosure from a taxpayer before it considers granting relief due to financial hardship.

This last provision is an important one. When filing for taxpayer relief, you will need to provide the CRA with complete details on your income, expenses, assets, and liabilities. While, at first, this may seem like a small point, remember that the CRA can potentially use this information against you, such as looking at the numbers and stating that it believes that paying your debt immediately is possible.

Also, there are several potential issues with the complexity of the program. While filing for taxpayer help seems pretty straightforward at first glance, dealing with the CRA is always complex.

Positives to Filing Taxpayer Relief

The CRA’s taxpayer help program is open to all Canadians who have been charged penalties and interest on their tax debt. There is no limit to how often a person can apply and you have the right to request relief each time it is warranted.

If waiving or cancelling the penalties and interest charges on your tax debt would help you be able to repay the money owing, then you may wish to consider filing taxpayer relief. However, it is best to speak with a professional before doing so. This will ensure that applying for assistance is the right option as well as verify that everything is completed correctly.