The Boy Scouts motto is “Be Prepared” and that was never put to the test more than in a recent file with the local CRA office. We were working with a debtor who was in debt to the tune of about $100,000. There was credit card debt but the majority of the debt was tax debt.
A Consumer Proposal was discussed as the best debt solution in this situation, but we knew that CRA would not consider any settlement of debt until all the outstanding tax returns had been filed. The main reason for the Bankruptcy and Insolvency Act of Canada is rehabilitation and getting back onto solid ground with the aim of moving forward. In other words, the filing of outstanding tax returns was a precursor to showing the CRA that the individual was doing her best to correct the past and acting in good faith. We also advised the debtor to retain copies of her bank statements prior to filing in order to respond to any CRA queries. From our years of experience in dealing with CRA, we knew that they would not only be looking at the previous taxation years, but also more current information. The debtor downloaded her bank statements from her internet banking website, submitted all outstanding tax returns and then the proposal was filed. CRA did request additional information and we were able to supply that information in less than a day. We were prepared for the request. Due to the quick turn around and responsiveness of the individual, it provided further comfort to CRA that the debtor was doing her very best to get back on track with her taxes. As a result of “being prepared” and supplying all the information quickly, CRA voted in favour of the consumer proposal.