Tax debt can be a crushing burden to carry and many believe it is a life-long burden. So, it may be surprising to hear that there are ways to settle or eliminate tax debt with the help of a Licensed Insolvency Trustee ("Trustee").
In formal proposals filed through a Trustee, the Canada Revenue Agency ("CRA") is open to accepting settlements for far less than the full amount, including the principal portion itself. This is something that CRA cannot do outside of a formal proposal. These formal proposals also stop CRA's powerful collection tools. For example, after a formal proposal is filed, CRA is prohibited from garnishing wages, seizing bank accounts or registering tax liens.Filing for bankruptcy with a trustee also legally stops CRA collection, and eliminates tax debts through a discharge process.
Don't be confused by American bankruptcy rules, which are more strict when it comes to tax debt. In Canada, income tax and HST debts have no special priority and are treated as general unsecured debts, much the same way that credit card debt is treated. This also includes tax liabilities of directors who have been assessed for the corporation's HST debts or unremitted source deductions
Proposals and bankruptcies have released countless business owners and other professionals from the crushing burden of tax debt. Therefore, those burdened with tax debt are encouraged to consult with a Licensed Insolvency Trustee to explore options to solve their tax debt problems.
Dennis Kish, BA, JD, CIRP, LIT
Licensed Insolvency Trustee | Regional Practice Leader
T: +1 (905) 433-2166