The old saying “keep your friends close and your enemies closer” could not be truer, then when it comes to the Canada Revenue Agency. Whether you love them or hate them unfortunately is completely irrelevant, as this government body is not going anywhere. At least not any time soon. Taking a possibly volatile relationship, and smoothing the waters down to at least a lukewarm tolerance of one another, is a goal everyone should be striving to obtain.
The number one reason above all else, as to why you should learn the ins and outs of working with the system and maintaining compliance; is simply the fact that the CRA, unlike other debt collectors, has the ability to control your funds simply by seizing your bank account. That is right folks… the CRA has within their rights, the ability to notify you and immediately reach their hands into your bank account, to withdraw whatever funds are available to pay towards an outstanding debt. This debt could be personal income taxes, GST, payroll accounts etc.
Now, I know our government is far from perfect, however, any relationship takes two to tango. Dodging those little brown envelopes (CRA letters/notices) will not make them slither back into their cozy little nooks and crannies. The best method to avoid a situation where you wake up to being unable to access the funds you thought you had, is to navigate the system and work within it to your benefit. If you are not sure as to how to make that happen, find someone who can help you. Even though it may cost you a little now by consulting or hiring a professional, it can literally save you thousands down the road.
Secondly, the Canada Revenue Agency also has another trick up their sleeves in terms of collecting debt, and this one is an uncomfortable situation to find yourself in; a direct garnishment. This method of debt collection is one that is sent directly to your employer, dictating the percentage of your income that is to be held off your pay cheque and sent directly to the CRA to be applied against your outstanding amount. We cannot imagine anyone loves the idea of having their financial situation, aired out to their employer and rightly so.
Thirdly, financial lenders and investors usually require a taxpayer to be up to date with the CRA prior to loaning funds. Obviously, this one is a no brainer. If someone is going to lend you funds, they want to ensure that no one else has a claim to them first. CRA will always have the trump card in their back pocket that leaves other lenders up stream without a paddle.
Now for the good news! The Canada Revenue Agency is not always the big bad wolf lurking in the woods, and the people working within the government body are just your regular folks. We do have the ability to work together to make sure at the end of the day, even though we may not be particularly happy about paying taxes etc., we should be able to feel good that we have dealt with it and understand what we need to do in order to avoid uncomfortable future situations.
We will leave you with a few words to the wise:
1. Always open the brown envelopes! Seems simple enough, right. I mean how are you to know what the CRA is even looking for if we don’t actually read the assessments and notices sent to us. Even when you think you know what it is, open it and make sure you’re on the same page!
2. If you do not understand what is being asked of you, or if there are changes on your account you cannot follow, ask for help so you can understand and move forward. We are always available, as are many other people in your community. Heck, you can even call the 1-800 number and make them walk you through what you are reading.
3. If you have an outstanding debt and cannot pay the amount in full, make payment arrangements. It is better to be in contact with the CRA, especially if you have been assigned an agent to deal with. Believe us when we say, they are not going anywhere!
4. If you notice changes, inquire to ensure they are correct. For example, if you receive a higher refund after filing your personal taxes, contact your tax preparer and ensure the assessment is accurate. I know its hard to believe, however, the CRA has been known to make an error or two.
Remember, we are always available to help you navigate your way through the tax system. While it may not be top on your list of priorities, this is one area we all have to contend with. How you handle this relationship, can either help you flourish or put a real damper on your day!