Owe money to the CRA? Here are some repayment options

OTTAWA –

Getting an revenue tax refund is usually a comfortable bonus to your family finances, however an surprising tax invoice may be an disagreeable shock, particularly if you do not have the money readily available to pay it.

But, consultants say, the Canada Revenue Agency is prepared to work with taxpayers to rearrange cost plans and should even be capable to provide a break on the curiosity you would possibly in any other case should pay.

Aaron Gillespie, an enterprise tax companion at KPMG in Hamilton, mentioned if you do not have the money to pay your invoice, the very first thing to contemplate is are you able to borrow cash at a decrease rate of interest than the present 9 per cent that the Canada Revenue Agency will cost you on overdue taxes.

“Usually, financing with the CRA is not a good option,” he mentioned “Usually you would want to look for financing elsewhere at a lower interest rate.”

However, if that is not an choice, Gillespie recommends contacting the CRA as quickly as doable and explaining your scenario.

If you have got a stability owing, your cost is due on April 30. However, as a result of that is a Sunday this yr, CRA will contemplate your cost on time if it receives it, or a Canadian monetary establishment processes it, on or earlier than May 1.

If you possibly can’t pay the complete quantity, you possibly can pay a part of it, which would scale back the quantity of curiosity you’ll owe. You may additionally attempt to prepare a cost plan with the CRA that may let you pay your invoice over time.

“What I’ve found is generally they’ll agree to a payment plan provided that you’re co-operative and that you’re fully candid and that you come forth with all your facts and your situation,” Gillespie mentioned.

The tax company additionally presents assist below sure circumstances that might see the federal government cancel or waive penalties or the curiosity charged in your excellent invoice.

Fred O’Riordan, nationwide chief for tax coverage at EY Canada, mentioned monetary hardship is among the many the explanation why the CRA could be prepared to grant somebody some aid.

“They don’t have discretion over tax amounts, but they do over penalties and interest” he mentioned.

“You can make an initial application, they will respond, and if you’re not happy with the decision, you can also send it back for a second look by the agency and they will reconsider it.”

If you do not have the money or cannot borrow the cash to pay your tax invoice, each Gillespie and O’Riordan mentioned it is best to nonetheless file your return on time so no less than you will not face the late-filing penalty.

Most Canadians have till Monday to file their return this yr, whereas the submitting deadline for many who are self-employed is June 15. And whereas the continued strike by greater than 100,000 federal authorities this week consists of employees at CRA, the tax company has not budged on the submitting deadline for this yr to date.

O’Riordan added that ignoring the issue and never submitting a return in any respect will solely make issues worse.

“Sooner or later, you’re going to get caught,” he mentioned. “And the longer you avoid getting caught, the more dire the consequences, because your penalties and interests charges are mounting all the time.”

Gillespie mentioned don’t ignore the CRA.

“The CRA has a lot of power and can undertake significant legal action against you, including garnishing wages, seizing assets,” he mentioned.

This report by The Canadian Press was first revealed April 27, 2023.