Tax Debt Settlement with Canada Revenue Agency

Is it possible to make a deal with Revenue Canada (now known as the Canada Revenue Agency or CRA) and obtain debt forgiveness for taxes you owe?

Yes. Here’s how to negotiate a tax debt settlement with Revenue Canada.

Negotiate with Revenue Canada (CRA) About Payment Terms

First, if you owe Canada Revenue Agency and cannot pay the balance of taxes in full, it is possible to negotiate with Revenue Canada in regards to payment terms. To do this you need to first contact your nearest Revenue Canada office. Explain your circumstances, and negotiate a tax payment plan. For example, if you owe $1,000, you may offer to pay CRA $100 per month for the next ten months. It will be up to Revenue Canada to decide if they will accept your offer, or take further action against you to collect the taxes owing.

Two points to remember about tax negotiation:

Whatever deal Canada Revenue Agency agrees to, you will continue to be charged penalties and interest until your debt is paid in full.

If you cannot reach an agreement with CRA, they have the power to withhold child tax credits and GST credits until your debt is paid. They also have the power to garnish your wages and take funds from your bank account, so treat this debt seriously.

CRA has broad garnishment powers. They can issue a CRA wage garnishment without a court order and, unlike other creditors, can garnish pension income. CRA simply has to issue a letter to your bank or to the government agency issuing your CPP or OAS cheques.

Will Canada Revenue Accept A Tax Debt Settlement?

As a general rule, CRA will not accept less than the full amount owed when dealing with an individual taxpayer. Their logic is simple. If they allow you to pay less than the full amount owed, they may be forced to make the same deal with everyone else.

However there is a way to settle tax debt and obtain CRA debt forgiveness for tax debts: make a consumer proposal to the Canada Revenue Agency.

At Hoyes, Michalos we have the experience to negotiate successful terms with CRA that will allow you to

  • Eliminate penalties & interest
  • Deal with tax garnishment or frozen bank account
  • Pay what you can afford
  • Protect your assets

Almost half of our clients owe some form of money to CRA when they file with us. Tax debts can be settled through both a personal bankruptcy and a consumer proposal. Talk to us about how.

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