1-800-372-7337
OR 416-665-3000

If you owe money to the CRA filing a Consumer Proposal may help. Canadian Revenue Agency is considered an unsecured creditor and provided your income and debt situation meets the general proposal guidelines there should be no problems with CRA giving you a “break”.

If this is the first time hearing about s Consumer Proposal you can read more about it here, but in short:

“A consumer proposal is a legal agreement between you and your creditors to negotiate the repayment of the money you owe. Usually, the debtor can ask for a reduction of the debt amount owed and a prolonged payment plan, while keeping your assets like a vehicle, home or RRSP.”

In order for your tax debt to be included in the proposal all outstanding tax returns must be filed (Income, HST, Payroll, etc.).

Although there are no other major rules apart from the above, here are a few things that you have to keep in mind:

• In order for the proposal to be accepted CRA needs to receive more than they would if you were to declare bankruptcy.

Yes, CRA debt can be included in a consumer proposal and they are willing to work with debtors to resolve outstanding tax amounts. However, your proposal has to offer some benefits, and this includes a reasonable payback amount.

• If 50% or more of you total debt is to the CRA, they become the ruling majority and your proposal will not go through unless they approve it.

While CRA won’t hold you captive just because they call the shots, it’s important to realize that the higher the proposal payment amount the more likely it will be accepted.

• All tax returns due during the proposal period must be filed when due.

It’s crucial to keep your proposal in good standing by filing your taxes on time and not accruing any more tax debts. All new income tax that becomes due during the proposal period must be paid. The proposal only covers the debts included in it at the time of filing. Any new debts accumulated after the proposal has been approved are considered separate.

If you have a large tax debt and are thinking about filing a consumer proposal contact us today for your free, no obligation consultation. Canada Revenue Agency wants to ensure that all of your assets are disclosed, and that all debts are being treated equally. The only way they can achieve this is by requiring debtors to file a formal proposal with a licensed trustee. Hence, they are not willing to enter into an informal debt arrangement or accept a debt management plans for less than the full amount owed.