The Taxman Taketh Away: How to Reduce Crippling CRA Penalties
CRA penalties and interest can be crippling and even double the size of a tax debt. We’ve all heard horror stories about the CRA and its efforts to enforce repayment. If you are facing Canada Revenue Agency (CRA) penalties, then you need to determine how you are going to reduce that burden in a way that works for you, not the CRA.
Yes, the CRA does offer some programs that remove penalties and interest, such as:
- The Taxpayer Relief Program – intended to provide relief of penalties and interest to those who can prove that an extraordinary circumstance led to their tax problem.
- The Voluntary Disclosure Program – offers a second chance to change a tax return you previously filed or to file a return that you should have filed.
Keep in mind that these are complicated programs to apply for. Furthermore, where relief is concerned, it is difficult to get CRA approval for even partial relief of penalties and interest.
Even if CRA agrees to cancel some or all your penalties and interest, you will still be left with a tax debt. Plus, the CRA never makes settlements on tax principal.The only question at this point is: can you pay the tax debt? If you can, then pay it.
If you cannot, then the problem is a much bigger one.The CRA will collect one way or another, there is no way around that fact.
The only way that you can get rid of CRA penalties, interest, and potentially reduce the principal tax debt you owe is through a consumer proposal or bankruptcy. Both will also protect you from disastrous enforcement action or stop it if it has already been put in place.
When exploring either option, keep in mind that consumer proposals and bankruptcies must be administered by a Licensed Insolvency Trustee (LIT). Why is this important? Because LITs do not represent you. They represent your creditors, and therefore will be doing everything they can to collect the most for the creditors. Once you share your personal and financial information with an LIT, they may be able to find ways to go after more of your money and assets.
Protect yourself and your information by always seeking out your own professional financial advice to explore all your options before going to a LIT.
At DebtCare, we want to help you become debt free.
Get in touch to discuss the best option for you by calling 1-888-890-0888.