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Types Of Debt

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Income tax debt results from a balance owing after you have filed your tax return.

Canada Revenue Agency is mandated to collect any balances outstanding and has a lot of power to do so. The government's wide reaching powers include withholding GST and child tax credits, seizing money in your bank account, and garnishing wages. CRA charges penalties and interest on the money you owe until the debt is paid entirely. This can be stressful and many people are intimated and confused when faced with income tax debt and the CRA.

If you have not filed your outstanding tax returns, the first step is to get them done. Many people procrastinate because of the emotional trauma involved and because they feel overwhelmed or confused. There are tons of options to help you, such as software or guides offered by CRA. The thing to remember is, it is better to file even if you think you owe money. You will avoid the penalties if you just get them the information they need. Once you have the amount owing, you can make a plan on how to deal with the tax debt.

Options for Dealing with the Debt in Vancouver and BC

If the debt is over $10,000 then you want to make sure you have an accountant or tax preparer review the returns to make sure you are taking advantage of all the possibilities under the Income Tax Act to reduce what you owe. It may be a small investment up front, but could pay off for you.

If you genuinely could not pay as a result of a serious event beyond your control, you can apply to the CRA under the Taxpayer Relief Provisions. They may waive or even cancel interest and penalties.

Consumer Proposal

Another option is to file a consumer proposal in Vancouver or any of our locations located through BC. Will help negotiate with the CRA and try to reduce the amount of the tax you owe. Many Canadians are using this option to propose a payment plan that is feasible for you and acceptable to the government. A consumer proposal allows you to decide the amount that you realistically can afford based on your budget. Contact a licensed insolvency trustee in Vancouver or any of our offices to help you determine your payments or use our debt calculator. Read more about consumer proposals.

Filing for Bankruptcy

The final possibility if you are finding you are unable to meet the debt obligations as they are due, is to file for bankruptcy. We recommend contacting our trustees at any of our locations in VancouverVernonPrince George, Victoria or Surrey to review your situation and confirm that your tax liability will be discharged if you go bankrupt.

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