It’s enough to cause panic in even the calmest person. Imagine owing the government money and not being able to pay.
It’s not quite as bad as you might think, however. Here’s what you do if you’re a little short come tax time.
The first step is to actually file your tax return. Don’t think the problem will go away if the government isn’t aware of it. If anything, failing to file a tax return will make things worse. You’ll have to deal with late filing fees on top of everything else.
As the old saying goes, you can run but you can’t hide. The government will catch up to you eventually. The Canada Revenue Agency will do everything it can to get paid, from seizing future refunds to placing a lien on any property you might owe. They can also garnishee your wages.
Once the government receives the tax return, it’s time to open communication. The CRA wants to get paid, and its debt collectors deal with people who owe taxes daily. These folks can tell the difference between somebody who’s serious about paying their debt and someone who isn’t. Work with the agent on the phone to come up with a reasonable payment plan.
Stretching out tax debt for a year or two – or even longer – is common. The CRA is known to be flexible on other terms, too.
It’s usually a good deal for overdue taxpayers to take the government’s financing option. The CRA charges only 5% annually on any unpaid tax balance, a very reasonable rate. And if you’re paying on schedule, the CRA won’t even consider seizing assets.
