Tax Problem Tips – Is the CRA Friend or Foe?
The tax season is just a few short months away, and that means, Canadians are getting ready to break out the calculators. If you’re on top of your taxes, a few days of hassle are quickly followed by a year of not worrying. However, if you owe a tax debt, or are nervous that one will be hanging over your head once you’ve filed, that year of not worrying may seem like a pipedream. This week we’ve got some tax problem tips to help you better deal with any issues.
First of all, it is important to note that the Canada Revenue Agency is not in your corner. No matter how nice the agent assigned to your case may seem, they are not your friend. When you call to settle a tax debt, hoping for some mercy, the agent may at first seem sympathetic, but don’t be fooled.
The first thing they will likely do is tell you that they will consider an arrangement with you once you’ve completed a financial disclosure form. This is a dangerous CRA form that requires information about your income, expenses, assets and liabilities. It will also ask you to provide information about where you work, live and bank. Often people will complete this form in good faith, assuming that once the CRA understands how much money you take in each month, compared to your current financial responsibilities, they will accept an arrangement based on what you can reasonably pay.
This could not be further from the truth.
What most Canadians don’t know is that the CRA will only consider your basic living expenses after seeing your budget and disallow payments to other things like credit cards. They will decide, based only on those basic living expenses, what you should have left over and often request a monthly payment so high that it will be impossible to pay.
Additionally, sometimes they will accept your arrangement temporarily. The CRA is not looking for a long-term arrangement, and thus once your arrangement ends or if they deny you an arrangement, they will use all of the personal information you disclosed in the financial disclosure form against you! Then they will resort to collection action, including garnishing your wages, placing a lien on your home, or freezing bank accounts, to get what is owed.
Before you complete one of these dangerous CRA forms or consider trying to negotiate with the CRA – have an independent review of your finances done by an independent financial consultant, hired by you to get an opinion as to your next best steps. Not only will they be able to help you anticipate what steps the CRA will take, they can also help you come up with a financial plan to deal with the tax debt so that you don’t get yourself into deeper trouble with CRA.
Protect yourself. Call DebtCare first. 1-888-890-0888.