With another year’s tax deadline to pay now passed, Licensed Insolvency Trustee and President of Sands & Associates Blair Mantin joined Global News to share some key facts Canadians should know about tax debt, and what you can do if you can’t pay your taxes and need help.

What if I Can’t Pay my Taxes?

Learn some key facts about having a debt with Canada Revenue Agency that you should know if you’re unable to pay your income tax balance.

1. Not Filing and Paying Taxes on Time Can Cost You…Daily!

If you were among the filers unable to pay their income tax balance in full before this year’s deadline, unfortunately your balance is going to grow. CRA’s add-ons to tax debt can make even a modest balance balloon very quickly with:

• Compounding daily interest on the unpaid latest balance owing.
  • Interest can also be applied to unpaid instalment requirements, GST remittances and more.
• Late filing penalties if your return is not filed on time and you have a balance owing. For example:
  • In 2021 most people had until April 30^th to file and pay their 2020 returns, with self-employed individuals having until June 15 to file, although they still must have paid the balance owing by April 30^th.
  • Late filing penalties started at 5% of your 2020 balance owing plus an additional 1% for each full month you filed after the due date, to a maximum of 12 months.
  • Late filing penalties may be charged at double the rate if you’re a habitually late filer – a 10% penalty plus 2% interest per month – making this tax debt even more expensive than many credit card interest rates!
• Even if you’re unable to pay your balance in full, filing as soon as possible still helps you avoid ongoing late-filing charges.

If you don’t owe anything on your income tax return, it’s always in your best interest to file. Being able to prove your income for credit or housing applications, and receiving benefits such as GST, GIS, Canada Child Benefit etc. are all reasons (besides fulfilling what CRA views as your obligation) to get your tax return filed on time.

2. Your Tax Debt Does Not Expire

Although you may be able to avoid your balance owing for a period, for most people unpaid income tax debt will catch up to them eventually!

Unlike some types of common consumer debts that are subject to a statute of limitations you can’t “wait out” money owing to government bodies like CRA for tax debt or student loans. These debts are not subject to the basic two-year liability limitation period that stops other creditors (such as credit card issuers) from taking legal action against you for unpaid debts under BC’s Limitation Act.

Learn More about BC’s Statute of Limitations on Debt

3. Your Employment Income and More is at Risk

Normally CRA will not start legal action until 90 days after the mailing date of your Notice of Assessment / Reassessment, and CRA’s legal warning about action being started against you normally consists of:

• 1 attempt for a verbal legal warning by telephone
• 1 written legal warning letter being sent

In some cases however, CRA is not required to inform you of actions it is taking. Whether you have advance notice or not, CRA is a powerful creditor and if you have unpaid tax debt (or even unfiled tax returns), they can implement severe collection action virtually overnight.

Other types of creditors may not be able to impact certain income sources when it comes to wage garnishments or asset seizures but CRA can resort to attachments on wages due to you from your employer (as much as 100%!) as well as:

• Self-employment or sub-contractor earnings from your clients.
• Pension and EI benefits (CPP, OAS).
• Rental or lease income from your tenants.
• Personal property such as your bank accounts, home, investment and insurance proceeds.

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– Jayvee Lester De Castro

I highly recommend Sands and Associates especially Jennifer Thom. If you have problem with you debt. She will give you the best options and support throughout the process. – Jayvee Lester De Castro – 1 day ago 

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– Jarrod Barratt

I’ve been having financial hardship for quite some time now and I am pleased I reached out to Sands & Associates recently. They were very quick to get started on helping me with relief and I never once felt judged in the process. Omer and Jennifer were very polite and informative in the process and I thank you very much for your help and support. I would recommend Sands & Associates to anybody looking for some flexibility in their financial struggles. – Jarrod Barratt – 2 days ago 

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I found Jennifer Thom to be very helpful and friendly going over my options to get my debt dealt with. I felt welcomed without judgment and she made my stress and anxiety lessen which was huge for me. Thank you for your help and I look forward to a new future where I can be in control and not worried about how I’m going to survive debt. All the best. Will recommend. – All the good things – 2 days ago 

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– Saba N.

Sandra was amazing from start to finish with my consumer proposal. From answering questions and getting back to me in a timely manner when I knew she was very busy, the process was quick and painless. Paying this off will be great and then I can build up my credit again! Thanks again, Sandra ♥️ – Saba N. – 2 days ago 

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– Ali D

I went to Sands & Associates because I was overwhelmed with my debt and had no idea what to do. Camille helped me set up my consumer proposal, and honestly, she made the whole process so much easier than I expected.

She explained everything clearly — what a consumer proposal is, how it works, what my monthly payment would look like, and what debts would be included. She never made me feel embarrassed or judged, just supported.

Because of her, I finally feel like I have control over my finances again. She walked me through every step, answered all my questions, and made sure I fully understood what I was signing up for. I’m so relieved and grateful.

If you’re thinking about a consumer proposal or just don’t know where to start with your debt, talk to Camille. She’s patient, caring, and really knows what she’s doing. Highly recommend! 🙌 – Ali D – 2 days ago 

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– Shubham Batra

I had an exceptional experience with Sands & Associates during one of the most stressful periods of my life. I was overwhelmed, anxious, and unsure of where to turn, but the team treated me with genuine care and understanding from the very first moment.

Helen was absolutely amazing, patient, compassionate, and incredibly knowledgeable. She made everything easy to understand and helped me feel supported at every step. Hashan was also extremely helpful and kind, always quick to respond and guiding me with professionalism and empathy.

Thanks to both of them, I finally felt relief and clarity during a really difficult time. I’m truly grateful for their support and highly recommend Sands & Associates to anyone who needs trustworthy help and real compassion. – Shubham Batra – 2 days ago 

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– Emilee Stonehouse

I am very happy I got to work with Sand & Associates. It has been making life so much easy dealing with the debt I had. Plus working with Dana, and everyone there has been a delight to move things forward and easier. Thank you Sands & Associates! – Emilee Stonehouse – 3 days ago 

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– Jenna Sullivan

Working with Carolyn was an absolute relief. From our very first conversation, she made what could have been a stressful situation feel manageable and even hopeful. She explained everything clearly, answered all my questions with patience and understanding, and made sure I felt supported every step of the way. Her professionalism and compassion made a huge difference, and I’m incredibly grateful for her help. I would highly recommend Carolyn and Sands & Associates to anyone who needs guidance and wants to feel truly cared for through the process. – Jenna Sullivan – 4 days ago 

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– Deep Brar

I can’t thank Sands & Associates enough, especially Jagdip Dial, for helping me through one of the most stressful times in my life. I was buried under debt and didn’t know where to turn, but Jagdip treated me with genuine kindness and respect from day one.

He walked me through every detail of the consumer proposal process, explained everything clearly, and never once made me feel judged. Because of his patience and guidance, I finally feel like I can breathe again and start rebuilding my life with confidence.

If you’re struggling with debt and feeling hopeless, please reach out to Jagdip and the team — they truly care, and they’ll help you find a way forward. – Deep Brar – 4 days ago 

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4. Tax Debt Forgiveness is Possible

There is hope for those dealing with tax debt! Contrary to what many Canadians may believe, if you find yourself facing an unmanageable CRA debt there are in fact two solutions that can allow you to have virtually all types of CRA debts forgiven/written-off, including income taxes, business GST and more – in addition to any other consumer debts you may have.

Both options can effectively help you deal with your debts and stop actions such as wage garnishments and accruing interest and penalties:

• Consumer Proposals: A unique consolidation and settlement solution that allows you to cut your consolidated debts down to an amount you can afford to repay, with the unpaid balance written-off by your creditors. No borrowing is required, and no further interest charges are applied.
• Bankruptcy: If your situation leaves you unable to afford any meaningful repayment towards your debts, filing for bankruptcy can allow you to have full forgiveness for virtually all your debts. The process often lasts as little as 9 months and is generally quite private and straight-forward.

In Canada, these debt management strategies are accessible only by working with a qualified Licensed Insolvency Trustee. There is no cost to connect to discuss your situation and evaluate all your options, and no referral is necessary.

Additionally, BC residents can get help from a qualified Licensed Insolvency Trustee and request services and support remotely, without needing to leave the comfort and convenience of home.

Get your plan to be debt-free, connect with a caring, non-judgmental debt help professional from Sands & Associates – book your free confidential debt consultation today.

The post 4 Facts About Tax Debt – Where to Get Tax Debt Help appeared first on Sands & Associates.

Watch the Global News clip below, and read on for more information about making a plan to deal with unexpected debt:

While not exhaustive, here are some examples of debts that are often unexpected:

Canada Revenue Agency (“CRA”) Debt

For some people (typically self-employed consumers) a balance owing to the Canada Revenue Agency is anticipated each year and savings are put aside to pay the money owing. For others, CRA debt can arise without warning, often due to one of the following scenarios:

• A new accountant has made mistakes or tried to use deductions that were not allowed;
• You had additional employment income and not enough tax was withheld at source;
• You are newly self-employed and unaware of filing or payment requirements.

CRA is a very powerful creditor – interest and penalties for money owing accrue daily and they can seize bank accounts and/or wages for unpaid tax obligations nearly overnight.

• If you’re unable to pay off Canada Revenue Agency debt in full (they’ll often allow a maximum of six months’ time for repayment), a Licensed Insolvency Trustee is your best ally to deal with outstanding tax debt. A Consumer Proposal is the only settlement CRA will accept, or alternatively a personal bankruptcy can also write-off CRA debt.

ICBC Debt

By definition, an accident that has resulted in a big balance owing to ICBC was something that you didn’t plan for! We often help people who were denied insurance coverage due to violations in terms of coverage and as a result have ICBC debt.

• Debt to ICBC is essentially government debt – there is no expiry on the debt, no statute of limitations applies to forgiving the balance, and ICBC generally is not empowered to make a deal with you to reduce amounts owing, especially if they are trying to recover claims paid out due to an accident. Furthermore, ICBC will often not allow you to renew your driver’s license or insurance coverage until the debt has been cleared.

The best thing to do is to be aware of your legal options. If you’ve been assessed the debt inappropriately, talk to a lawyer about disputing the debt. If the debt is valid, ICBC will often work with you on a payment plan for the full amount.

• If you’re unable to pay the full amount owing, a Consumer Proposal or personal bankruptcy can be used to reduce and/or eliminate ICBC debt.

“Life Event” Debt

Few people have emergency funds or savings at the ready, leaving them vulnerable to various life events, with separation/divorce being the most frequent unplanned life event that causes a financial strain.

• Two main financial impacts from divorce:
  • Marital debts may be split – one partner can seek payment from the other for debts incurred jointly;
  • Cost of legal proceedings – hiring lawyers and engaging in custody or asset battles can quickly deplete financial assets;
  • Cost of reestablishing oneself – significant up-front costs for each partner in setting up two new separate households and meeting the costs of living now, on half of the shared income.
• Though you can’t (and perhaps shouldn’t) plan for the dissolution of your relationship, you can take steps each day to build financial transparency between partners so that each person has a clear sense of where the couples’ finances are at.
• The breakdown of a relationship can be stressful and all-consuming, leaving each partner vulnerable to making bad financial decisions, especially in regards to debt. Take the time to get guidance – if you’re still amicable, meet together with a Licensed Insolvency Trustee to assess the scenarios of who will owe what as both partners move forward separately.

With a network of local offices throughout the province, the caring debt professionals at Sands & Associate are here to help you when you need a plan to get out of debt. Find out how you can get a financial fresh start today, book your free debt consultation now.

The post Global News: Unexpected Debt – and What to do About it appeared first on Sands & Associates.

DO:  Ask for help filing your return if you feel it’s beyond your paperwork skill-set.  If your return is basic and consists of a T4 or two, chances are you could file it yourself without missing out on credits.  For people who are self-employed or who have more complex finances, it’s a good idea to have reputable bookkeeper or accountant check over your return to make sure you’re getting all the benefits you may be entitled to.

DON’T:  Try to “outsmart” the government by making claims that are uncertain.  If you are eligible for certain deductions or credits, by all means use them, but be wary of write offs that seem too good to be true – they probably are.  Recent charitable donation schemes for example, have left many taxpayers with a large bill on their hands.  As cautioned above, if you’re unsure – ask a reputable, qualified professional first.

DO:  Look at why there is a balance owing and try to correct this going forward.  If there’s more tax due this year because you withdrew from your RRSPs or you have more than one job and aren’t having enough tax withheld at source, make note and either set aside more throughout the year, or better yet ask one of your employers to remit a little more each paycheque.

DON’T:  Stop filing altogether because you think you’ll be continually adding to the balance.  Not filing returns for a long period of time can result in many other problems, such as a back-log of MSP premiums due, and not receiving Child Tax or even GST benefits that your family may be entitled to.  Allowing returns to pile up year after year isn’t likely to help in the long run, and eventually it will probably just mean lost sleep down the road.

DO:  File AND pay on time.  Balances due must be paid on or before April 30^th each year, and unless you or your spouse was self-employed your returns should be filed by then as well.  Late returns can mean accumulating interest unnecessarily, as well as fines and penalties.

DON’T:  Ignore the bill if you owe.  Canada Revenue Agency is a powerful creditor and disregarding the balance owing you may have can result in serious collection action such as bank account seizures or even a garnishment of your pay.

DO:  Be aware that there are two options for dealing with unmanageable tax debt.  Both a consumer proposal, or bankruptcy can eliminate or reduce tax debt, more importantly they are the only options that can.  If you find yourself in a position where the debts are out of hand, speak with a licensed trustee about your situation, they are legally empowered to assist you with Canada Revenue Agency debts.

As the expression goes, two things in life are certain – death and taxes – while we can’t control one, we can certainly help guide the other!

To speak confidentially with a BC Licensed Insolvency Trustee in your area, please contact us for a free debt consultation.

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