Tax Debt Relief Options in Canada

Why is tax debt particularly stressful?

Owing taxes to government agencies can often feel intimidating, especially given the unparalleled powers of the CRA. They are able to quickly and forcefully implement a range of collection activities, which is why it is important to address tax debts as soon as you can. Here are some of the actions the CRA can take against you:

• Freezing your bank account 
• Wage garnishments, deducting your income via your employer
• Charging you interest and penalties
• Seizing your investments
• Placing a lien on your property
• Withholding any tax credits you may be owed

How should you tackle tax debt?

When it comes to repaying your income tax debt, we recommend taking the following steps:

• Getting a clear idea of what you owe. Complete and submit any outstanding tax returns. While it can feel scary, the first step forward is understanding exactly the tax debt you owe so that here at Spergel, we can help you to manage your tax debt.
• Be transparent with the CRA. If you know you will not be able to make your tax debt repayments on time, it is best to communicate with the CRA. You may be able to arrange a payment schedule that works for you. Do not feel pressured to commit to something you realistically cannot meet – the CRA will always prioritize their debt over any other financial obligations you may have.
• Book a FREE consultation with Spergel. If you feel your tax debt is out of control, do not panic. Our expert Licensed Insolvency Trustees are here to help you assess your tax debt relief options, from taxpayer relief to reducing or eliminating your tax debt completely.

Your tax debt relief options

If you are struggling to repay your tax debt and cannot afford your repayments, you will be relieved to know you have multiple options to gain tax debt relief. Simply book a free, no-obligation consultation with a Licensed Insolvency Trustee at Spergel to explore your tax debt relief options, including the following:

Reduce your tax debt by up to 80% via a consumer proposal

Your Licensed Insolvency Trustee will work to negotiate with the CRA to reduce the amount of tax debt you owe when you file a consumer proposal. A consumer proposal is a legal form of debt relief that reduces the amount of debt you owe by up to 80% via a formal negotiation with your creditors. It offers protection from your creditors, and enables you to keep your assets. At Spergel, we have a 99% acceptance rate on any consumer proposals that we file.

Clear your tax debt completely via bankruptcy

If the alternatives are not a fit for your circumstances and you would rather eliminate your tax debt relief completely, bankruptcy could be the right tax debt relief option for you. Bankruptcy is the process of assigning any non-exempt assets you might have over to your Licensed Insolvency Trustee in exchange for clearance of your debts. It offers immediate protection from your creditors, including the CRA.

There are alternative options for handling your tax debt, although they will not guarantee protection from your creditors: 

• Organizing a voluntary repayment plan with the CRA, although do note you will need to repay 100% of your tax debt
• Securing a debt consolidation loan to repay your tax debt
• Making a fairness application to the CRA, to reduce the interest and penalties associated with your tax debt

Why should you get a Licensed Insolvency Trustee to help with your tax debt?

Licensed Insolvency Trustees are the only professionals in Canada that are legally able to file all forms of debt relief, including consumer proposals and bankruptcy. In line with the Bankruptcy and Insolvency Act, Licensed Insolvency Trustees are able to stop the CRA in its tracks, and assist with the following:

• Stop collection calls
• Stop wage garnishments
• Reverse frozen bank accounts
• Help you to keep HST/GST and child tax credits
• Remove liens on property

At Spergel, our expert Licensed Insolvency Trustees can help you with:

• GST/HST tax debt
• Small business tax debt
• Back income tax debt
• Unpaid source deductions
• Any other unsecured or secured debts you might have

“It was a great experience working with Spergel’s amazing team of experts. They gave me peace of mind and empowered me to a better financial future. Thank you Spergel for your help!” – Sid Gray, March 2024