Life Happens: Tax Debt
Dealing with tax debt can be an overwhelming and daunting experience, especially when faced with mounting liabilities and looming penalties from the Canada Revenue Agency (CRA). For many individuals, the burden of tax debt can feel suffocating.
Whether you're grappling with overdue tax payments, unfiled returns, or disputes with the CRA, the challenges associated with tax debt can significantly impact your financial well-being and peace of mind.
Our team is committed to providing compassionate support and practical solutions to help you navigate this complex terrain and find relief. With our guidance, you can take proactive steps to address your tax obligations and regain control of your financial future.
"Navigating through tax debt can feel like an endless maze, but rest assured, there are ways out. Let's work together to untangle the complexities and find a solution that brings you peace of mind."
- Tara Silliker, MNP Licensed Insolvency Trustee
Frequently Asked Questions
Tax debt arises when individuals owe the government money due to insufficient tax payments. While income tax deductions are typically taken from paycheques as estimates of annual tax obligations, the actual amount owed can vary based on individual income levels.
If one's tax deductions do not adequately cover their tax liability, they will owe an amount known as tax debt when filing their tax return.
Learn more about tax debt here.
The CRA does have the ability to take collection measures without having to go through the court system. For example, they can:
- Garnish your wages
- Put a freeze on your bank account and seize the funds on deposit
- Withhold certain tax credits such as GST refund cheques to pay down the debt owing
- Arbitrarily assess any income tax returns not yet filed and apply penalties and interest to the debt owing
- File a lien on your property to ensure the debt is paid if the property is sold. The lien can also prevent you from being able to refinance
Read more about how the CRA collects tax debts here.
If you're unable to pay your income tax debt in full, consider these options:
- Payment arrangements: Contact the CRA to set up a manageable payment plan, possibly avoiding significant interest and penalties.
- Consolidation loan: Explore obtaining a consolidation loan from a bank or private lender to combine your income tax debt with other outstanding debts into a single monthly payment.
- Bankruptcy or Consumer Proposal: If your income tax debt is unmanageable, consider filing for Bankruptcy or making a Consumer Proposal.
Speak with a Licensed Insolvency Trustee to discuss the best option for your unique situation.
Have more questions?
Visit our FAQ page to access many other answers to your most pressing questions.
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Tax Debt: Your Questions Answered
As another tax season has come and gone, you may still have lingering questions regarding tax debt related to CERB, student loans, and collection calls. To answer your questions, and to learn about the options available to you, tune into our Tax Debt VLOG series below with MNP's Licensed Insolvency Trustees.
