What Can the CRA Require me to Pay?
What Happens if you Owe Money to the CRA?
It is important to know that if you are unable to pay the full amount that you owe to the Canada Revenue Agency, then it is essential to either contact the CRA directly or to retain representation to communicate with them for you. The CRA wants to know why you cannot pay, if that is the case. So communication is key here. Also, each day that passes with an existing balance on your account, the CRA will be charging interest. This interest compounds daily.
Finally, a CRA requirement to pay may be issued against you for the amount you owe. This CRA requirement to pay can take different forms. You may have your wages garnished, your bank accounts seized, or you may even have a lien placed on your property.
What Can the CRA Require me to Pay?
If you have an outstanding balance and do not establish a line of communication between either yourself and the CRA or your representation and the CRA, you may receive an initial warning letter indicating that action may be taken against you if your balance is not repaid.
If you cannot pay your debt in full immediately, then the CRA may be willing to negotiate a payment arrangement that would repay the balance owing. Put simply, it would allow you to make smaller payments over time. In order for the CRA to consider a payment arrangement, however, you may first need to display that you have tried to repay your debt in full – either by borrowing money or reducing your expenses.
CRA Requirement to Pay (“RTP”)
A CRA Requirement to Pay is an enforcement action that is used to collect a tax debt. Without warning, the CRA will send a requirement to pay to any third party associated with you who may either hold your assets or owe you money. This CRA requirement to pay will not only inform third parties of your amount owing to the CRA, but it will also instruct the third parties to send any money generated, initially intended for you, directly to the CRA to cover your amount owing.
Depending on your financial situation, your unwillingness to communicate with the CRA, and any avoidance towards establishing a payment arrangement, the CRA requirement to pay notice can have damaging effects for you and your business. For example, this CRA requirement to pay can order the bank to freeze all of your accounts. As a result, pre-authorized payments will no longer be accessible, and payments initially meant for other creditors, will instead go to the CRA. This means further strain with associated third parties, potential NSF fees, and potential legal action from unpaid creditors.
Once a CRA requirement to pay has been issued, a higher level of negotiation will be required with the CRA to have any garnishments, legal action and frozen accounts lifted. What can aid in the removal of the Notice is conveying to the CRA that your ability to live and afford the basic necessities of life like food and shelter are being impacted. One can also attempt to negotiate a payment arrangement, but at this juncture the CRA may be less willing to negotiate. It is difficult to accomplish this removal on your own, but the above are avenues that can be attempted if you are incapable of paying your balance.
If you have an amount owing to the CRA, and you cannot afford to pay, give us a call to talk about your options. A CRA requirement to pay may take all of your available funds, and you may not be able to keep the lights on. We can help! Contact us today to learn more!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.