Article provided by: Smythe LLP
If you are contemplating bankruptcy, you will undoubtedly have a lot of questions. However, there are some people in Canada that are unable to pay off all of their tax debts as laid out by the Canada Revenue Agency (CRA) When this is the case, it might be your best option to file for bankruptcy to get out from under the significant financial hold that it has on you. Instead of going it alone, you could talk with a professional about the best way to navigate the CRA bankruptcy process.
Should I File Bankruptcy For Tax Debts?
It is often misconceived that tax debts, whether they provincial or owed to the CRA, are not going to go away after you go through bankruptcy. However, this is far from the truth. There are only a few kinds of debts that can survive bankruptcy, and the good news is that all tax debts tend to go away after the bankruptcy is over with. You will simply have to confirm whether or not there have been any liens on your assets put in place by the CRA.
What Happens If I Owe CRA A Lot Of Money?
If you are not able to pay the full amount that you owe to the CRA, you can take action by getting in touch with them or having a lawyer take care of it on your behalf. The last thing that you want to do is ignore your tax debts, but you may have a few viable options that are available to you. In many cases, the CRA will work with you to find a good way to resolve your tax debt. In some instances, people have been able to qualify for payment arrangements and other methods of paying down the money that is owed.
File Sooner Than Later
When it comes to a CRA bankruptcy, it is always best the sooner that you file. Your tax debts are not going to simply go away on their own so that the last thing you want to do is wait too long and you could end up having your bank accounts and other assets frozen. You might also be surprised to know that if you have a business, the CRA has been known to contact your major customers with a notice that directs them to pay them rather than you. The best way that you can avoid any nasty issues from arising is to pay off your tax debts. However, if that is not possible at the time, you can work on declaring bankruptcy to help take the weight off of your shoulders.
To file, you must:
- Be insolvent
- Have filed all outstanding tax returns
- File HST returns if you are self-employed
- You must complete your bankruptcy duties
- Must keep all future taxes current, and more
If you would like to learn more about CRA bankruptcy and how you can get help, we invite you to get in touch with us at Smythe Insolvency. We will be happy to talk with you about solutions to give you a better financial future and help you to get out of the hold that your tax debts have on you. All you have to do is contact us today to set up a time for a free consultation.
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