Many of us know that the CRA can collect money on behalf of the following departments :
1) Individual income tax
2) Payroll deductions
3) GST/HST remittances
4) Corporation income tax
5) Customs, excise and other levies
6) Benefit overpayments including Canada Child Benefits and GST/HST credits
However, you will also have to deal with CRA collections department if you owe money under the following programs:
1) Defaulted Canada Student loans
2) Employment Insurance ( EI ) overpayments and penalties
3) Training Allowances Payment System overpayments
4) Canada Pension Plan overpayments
5) Grants and contributions overpayments
6) Operations and maintenance receivables
7) Other Employment and Social Development Canada program overpayments and/or penalties
Ideally, to avoid penalties and interest compounded daily, you should try to pay outstanding balances in full by online banking, mail, or through your financial institution. If you are like the majority of us who simply cannot pay in full, be proactive and contact the CRA. Don’t wait for them to contact you. Believe me the balances don’t go away! The sooner its dealt with, the better for everyone!
You can set up a payment arrangements with the CRA for amounts owing, however, they may ask for the following information in order to determine your ability to repay and what amount;
1) A letter from your lending institution showing you have tried to borrow the amount but do not qualify
2) Proof of your revenues, expenses, assets and liabilities to determine your net worth either by telephone or completing a questionnaire
There are two devices on the CRA website that can help with estimating your payment amount so you have a rough idea of what to expect;
1) Payment Arrangement Calculator, which will allow you to calculate payment options including the CRA interest rates
2) The Income and Expense Worksheet, which will help you to calculate your income available for debt repayment
If you find the debt is getting out of control due to the interest and penalties being levied by the CRA, you can always ask for relief from the penalties and interest charges to reduce your overall debt.
If you’re interested, click the link below for further information:
Always remember, if you fail to file any tax returns or miss a scheduled payment, the CRA can cancel your payment arrangement and take any legal action to collect the debt in full.
Legal action can be done in one or more of the following manners;
1) The CRA can seize (garnish) your income, your bank account or any other monies owed to you from different sources
2) The CRA can legally register your debt with the Federal Court of Canada, once registered this is the same thing as having a judgement placed against you and is a matter of public knowledge ( everyone will know your business)
3) The CRA can get a legal writ or memorial and seize your assets (car, boat, cottage, rental property, personal residence or anything they deem has value) to be sold to pay off the debt. If they proceed this way and have a court enforcement officer sell your assets, you will also be responsible for any legal debt on top of your CRA debt
It is always best to work with the Canada Revenue Agency. Do not try to hide from them or avoid them, as they do not just “go away”. We are also always available to assist if you are feeling shy!