The Canadian Revenue Agency (CRA) is in charge of collecting taxes and implementing tax laws and policies in Canada. If you don’t pay your taxes, you will end up in debt to the CRA.
You shouldn’t avoid filing or paying your taxes as the longer you don’t pay, the more your debt will grow. The CRA can seize your assets, freeze your bank accounts, garnish your wages, or register liens against property you own to try and get the money that you owe them.
There are three ways that you can quickly stop CRA debt in Canada. We will discuss them below.
1. Payment arrangements
This is an agreement you can come to with CRA where you can make smaller payments over time until you have paid off your CRA debt, including interest.
Over at the Canadian Government Website, they have a Payment Arrangement Calculator where you can calculate your payment options. They also have an Income and Expense Worksheet where you can calculate how much net income you have available to pay your CRA debt.
The CRA will ask you to provide proof of income, expenses, assets, and liabilities in order to figure out how much you can pay. This will be done over the telephone or by filling out a financial questionnaire.
Once it is verified that you can pay, it’s time to choose an arrangement to pay off your CRA debt. This can be done in three ways:
- Pre-authorized debit – you pay online. You can set up your account and set the payment amount and schedule here.
- TeleArrangement – make payment arrangements via phone. This is the hotline you can use: 1-866-256-1147
- With an agent – either complete an Individual tax debt call request or call 1-888-863-8657.
Debt consolidation and CRA payment arrangements
Back taxes can be paid with a debt consolidation loan. Debt consolidation loans have a lower interest rate than other types of loans, usually around 10% or lower, so it could be a good idea to take out one to pay your CRA debt.
2. Government-Approved Debt Relief
Canadians can apply for debt relief through a Debt Relief Agency like National Debt Relief Services. Back tax debt can be paid this way as well as HST.
You file for a debt relief plan with the help of a debt consultant. The first step they will take is to assess your financial situation. If they determine that you are qualified for a government-approved debt relief program they will begin preparing the proposal.
Your debt relief consultant will determine how much you can reasonably pay your creditors and draw up a proposal that will be submitted to them. The proposal will contain a debt settlement amount, and if your creditors agree, you can pay them this amount by making a lump-sum payment or a series of monthly payments.
The advantage of filing a debt relief program is that it will allow you to keep your assets and will prevent collection companies and creditors from contacting you. So if you file a debt settlement, the CRA will no longer seize your assets or garnish your wages.
Filling a debt relief program only impacts your credit for 3 years from the date that you complete the program.
You can take advantage of our Free Consultation by clicking below. Our expert debt consultants will help you sort out the best debt relief program suitable to your current financial situation.