If you are a sole proprietor or in a partnership, then June 15th is a date quite relevant to you. June 15th is your tax deadline. For some business owners, this day represents just another day of paperwork. For others, however, it represents the reality of new tax debt and the potential of having to deal with CRA collections.
We know that it can be incredibly tough, especially for small business owners, to manage the business and still stay on top of the books and receipts. So much paper and never enough time!
With regard to tax debt, part of the problem often stems from business owners trying to estimate what they will owe on company tax and HST, but not setting aside money throughout the year. The hope is that when the time comes, they will be able to pay. Often this stems from overestimating potential deductible expenses and putting aside money based on those calculations. Any changes to revenue at year-end, can lead to an unanticipated tax debt – one that, if you can’t pay right away, will leave you dealing with CRA collections. One of the toughest things about owing CRA money is that there is no grace period. CRA is not interested in waiting to receive the money – especially where trust monies like HST are concerned. This is especially true if you were behind and have filed for the first time in years.
It is not illegal to have tax debt owing to the government. However, failing to file your tax returns and failing to declare your income is tax evasion. This leaves you vulnerable to penalties, interest and even prosecution. Some people delay filing thinking that this will buy them time to pay. Delaying filing only causes your tax debt to balloon in size and can land you in real trouble. CRA can even notionally assess you and tell you what taxes you owe, and assess penalties and interest based on that, then proceeding to attempt to collect that money from you.
If you don’t have the money to pay your taxes in full, you need an alternative strategy for dealing with CRA that includes both a payment schedule that you can afford and a plan that protects you from CRA enforcement action.
When CRA collections comes calling, be prepared to answer the call. The Licensed Insolvency Trustees at Spergel can help you get your tax issues straightened out.
Please reach out for a free consultation to review your finances to come up with the best solution: toll-free at 310-4321.