For all those who have received a tax bill from the Canada Revenue Agency (CRA) and do not have immediate cash to pay it off, here are a few payment options that you may consider based on your tax situation. You may consult your AG Tax advisor for more details, and to help you arrive at a tax payment option that suits your situation.
CRA Tax Payment Tips
• Consider Your Alternatives: If your cash shortage is of a temporary kind, you may consider alternative ways to arrange for the money. You may ask a friend or family member if they would be willing to lend you money, or if you have any assets available, you might look into selling them for cash.
• Use your credit card: You may use your credit card to pay off the balance due, since the interest and financial charges may prove to be less than the penalty charged by the CRA.
• Take a loan or use your Home Equity Line of Credit: Consider taking a personal loan to fund the tax payment. You may use your home equity as well; which may have a lower interest rate. Canadian banks do not provide unsecured loans, so you will need to provide an acceptable asset as a security.
• Get in touch with the CRA: If you are absolutely sure that you do not have any alternative way to pay your tax bill in time, contact the CRA. The CRA will charge a penalty amount depending on the owed amount and the additional time required. It also takes into consideration whether you have been late or missed any past payment or filing.
CRA Tax Payment Plans
• CRA Financial plan: The CRA provides you with an option to set up a financial plan to pay your taxes. If one is able to prove to the CRA that they are unable to meet their tax obligations due to qualifying circumstances, an arrangement might be made. There will be daily compound interest charged on the unpaid amount until it is paid in full. Consult your AG Tax advisor to see if this is the right option for you.
• File a consumer proposal: If none of the above options are available to you, you may look into filing a consumer proposal to the CRA through a licensed trustee. Aside from filing for bankruptcy, this is one of the last options in dealing with tax debt. The likelihood of your proposal being accepted by the CRA depends upon your specific situation, and it is strongly advised that you receive proper professional advice to increase the chances that your proposal is accepted.
• Taxpayer relief: Under certain situations, such as financial hardships, unemployment, natural disasters or a family crisis (death/ accident), the CRA may cancel or waive interest and/or penalties on unpaid taxes. The CRA may also do so when an error has been made in processing or providing tax information. You’ll need to file Form RC 4288 (Request for Taxpayer Relief) to apply; AG Tax can assist you with this.
Always remember that if you don’t take the required measures to resolve your unpaid taxes, the CRA has the right to direct money from your income and/ or bank account toward your tax bill. They can even seize and sell your assets to settle your tax bill. Your family benefits, like GST/HST credits can also be withheld by the CRA.
AG Tax LLP Can Help
Everyone’s tax situation varies, and needs to be treated on a case by case basis. Let our specialists at AG Tax help you plan to prevent, or if necessary work through, these potentially difficult circumstances. AG Tax has qualified tax advisors and accountants who have the knowledge of and experience in handling these complex tax situations.
Additionally, if you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance.
As a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.