For most Canadians, taxes are a necessary evil which we deal with primarily in March or April and then promptly forget about. Sometimes, once our notice of assessment arrives, we greet an amount owing, often not a surprising occurrence, pay the debt, and move on without a thought of taxes again until next year. For those, however, that have dealt with the Canada Revenue Agency for tax debts, reassessments or objections – things are never quite this simple. Today we talk CRA jeopardy orders – a rare, but nasty, reality for some taxpayers.
When you receive your assessment from the CRA, but don’t agree with it, there are a few options as far as disputing or objecting. Often the most common is filing an objection, which can, unfortunately, take months or even years to reach a conclusion. Typically, once an objection has been filed, the CRA cannot collect any amount of reassessed income tax, interest or penalties while the reassessment is under objection or appeal (although CRA can collect half the reassessed amount, if the taxpayer is a large corporation).
However, what most taxpayers are unaware of is the fact that, if there are reasonable grounds to believe that the collection of the tax debt is at risk, the CRA can move for a collection order and, if successful, can then take immediate steps to collect the full reassessed amount, prior to the conclusion of the issue.
When the CRA believes an individual may try to get away from a tax obligation by some means, they naturally want to stop them from doing so. This could mean withholding their tax refund or leveraging some enforcement action to collect the debt. However, unlike other enforcement action, such as a wage garnishment, in order to obtain this order the CRA requires court assent.
These are called CRA jeopardy orders.
What would constitute risk as far as collecting the tax debt? The transfer of money to a non-Canadian resident, tax debt to gross income ratio (anything more than 37% indicated danger of loss), age of debt and/or debtor, installments and filing history, unfiled returns, flight risk, and prior insolvency and possible assignment in bankruptcy all constitute risk factors which may lead to jeopardy orders.
If you owe a tax debt after receiving your reassessment, but do not agree with it, we can help you file an objection. If you’ve filed an objection and are now facing a jeopardy order, we can assist with that too. Tax Solutions Canada offers solutions to your tax problems. Call us today at 1-888-868-1400.