Dealing with tax debts can be a challenging and stressful experience. However, various options are available for those struggling to pay off their tax debts.
Repaying Taxes with a Voluntary Payment Plan
Consider making a repayment plan with the CRA to settle your tax debts, which requires paying the total amount plus penalties and interest over a specific term. It can be a complex process that may require assistance from a tax accountant.
Resolving Tax Debt through a Consumer Proposal
A consumer proposal is the only tax relief option accepted by the CRA to eliminate the amount owed. It can also help alleviate your debt situation, such as those due from credit card debt. A consumer proposal is filed with a Federally Licensed Insolvency Trustee, and the CRA requires filing all outstanding tax returns before voting in favor of the proposal.
Filing Personal Bankruptcy
If you are overwhelmed by tax debt along with other debts, and a proposal to settle them doesn’t seem feasible, filing for bankruptcy may be the best solution. Bankruptcy can discharge tax, government debt, and other unsecured debts.
These options vary in effectiveness and the amount of debt they can help you settle. We highly recommend seeking guidance from a professional mortgage broker who can provide expert advice that can help you decide your next course of action.
At TurnedAway.ca, our team is here to help you connect with an experienced financial advisor who can provide you with the resources to help you manage your CRA debt.