Consultations available by video and phone with electronic signatures.

I once heard someone refer to the Canada Revenue Agency as, “the best collection agency in the world”. I simply smiled and said, “I have lived in the United States and the IRS is pretty good too”. A debate ensued, but, in the end, I have no idea who the world’s best collection agency is.

eliminate tax debt in canadaHowever, I do know that CRA is an excellent collection agency with very powerful collection tools at its disposal. CRA can quickly seize bank accounts, garnish wages and accounts receivable, and register tax liens on title to real property, with little or no notice to the taxpayer. Meanwhile, penalties and interest can escalate tax debt to insurmountable levels.

Therefore, it’s not surprising that many Canadians believe that there is no way to eliminate tax debt, other than by getting into a brawl with CRA. Perhaps this belief stems from media reports emanating from the United States, where tax debt is more heavily protected by U.S. bankruptcy laws.

However, here in Canada, filing Bankruptcy or making a Consumer Proposal legally stops CRA’s collection tools and eliminates income tax debts and HST debts. This includes the liabilities of directors who are assessed for the corporation’s HST debts, or unremitted source deductions. In Consumer Proposals, CRA is open to settling tax debts, including the principal portion, for far less than the full amount; which is something it cannot do outside of a formal proposal.

Bankruptcies and Consumer Proposals have released countless Canadians from the crushing burden of tax debt, while at the same time leaving their registered retirement savings intact. Therefore, anyone burdened with tax debt may wish to consult with an insolvency professional and explore all of their options, especially before dipping into registered retirement savings that they will need during their golden years.

 

Book a free Debt Solution Consultation