If you live in Winnipeg or Manitoba and owe an income tax debt, you have a few options available to do. Sometimes, you can make an arrangement with the Canada Revenue Agency (CRA) for taxes you owe. You can try to negotiate a payment arrangement with them, or file a proposal under the Bankruptcy and Insolvency Act (BIA) to avoid filing for bankruptcy.
Negotiate payment terms
If you owe taxes and cannot pay the balance in full, you can explain your financial situation to CRA and try to negotiate a payment plan. For example, if you owe $1,000, you may offer to pay $100 per month for the next ten months. But, be aware that even if CRA accepts your offer, you will continue to be charged penalties and interest until your debt is paid in full.
If you are unable to successfully negotiate terms, CRA may take further action against you to collect the taxes owing. CRA can withhold tax refunds and HST credits, garnish your wages or accounts receivable, take funds from your bank account and place a lien on your home or other real property. CRA does not have to go through the normal Courts process so they can act very quickly.
Filing a proposal
Filing a proposal stops both collection action and interest and penalties. Normally a proposal is for less than 100% of the debt you owe. However, CRA has specific criteria regarding proposals.
Our Licensed Insolvency Trustees and Administrators are familiar with all aspects of proposals to CRA. We have assisted countless individuals with income tax debt to arrange successful proposals to CRA.
Bankruptcy and income tax debt
It is a common misconception that personal income tax debt is not discharged by bankruptcy. This is not true; personal income taxes are covered by bankruptcy.