If You Owe The CRA Money



Thousands of small business owners across Canada are faced with the same dilemma every day. You have enough money to pay your rent, your employees, or you can pay CRA the GST you collected on their behalf. So, what do you do?

Obviously, you pay your rent or your employees. But now, you owe CRA, and this process tends to repeat itself. 6 months later, you owe the CRA $35,000 and they start calling.

What do you do? Ignore them, right? WRONG!

The CRA has been granted very powerful tools by the Canadian Government to collect taxes on their behalf, and some of their methods can definitely seem to be extreme.

They will start with some informal letters, you will be advised of the debt owing and asked to pay the balance in full. These letters are computer generated and look like standard form letters, because that is what they are.

Next, you will receive a much more strongly worded, almost threatening letter. This one needs to be taken very seriously; if you ignore this one (which clearly states they may take legal action) – they will!

You may get the courtesy of a phone call, or, more often than not, you will login to your bank account one morning to find that it has been seized by the CRA and every penny you had in your account is now gone!

Check your mail a few days later and you will get a copy of the order – too late!

The CRA tosses 3rd party demand letters around like a child throws toys; These demand letters (also referred to as Garnishment Orders), are very powerful legal documents; failure to ignore or not adhere to the demand can put you (or the 3rd party) into serious legal trouble.

But, you were wise, you knew this was going to happen and you opened a new account at a different bank right?

CRA will still get you! They can (and will) then send demand letters to ALL of the banks and they will eventually find your new account.

If that does not work, or it is taking to long (in CRA’s opinion), they can then send the same 3rd party demand letters to your clients!

That big payment that you were expecting from your best customer – forget it! The customer is now legally obligated to send the payment directly to CRA.

Once these options are exhausted, (or perhaps you have gone out of business completely), they are not finished. They can (and will) go after you personally for some of the debts.

“Trust Funds” such as Payroll Source Deductions and GST pose a very special problem; They have Director’s Liability attached.

What does that mean?

It means the Directors of the Corporation (YOU) can be held personally liable for the money owing, plus interest and penalties.

Trust us, they will not stop, nor will they negotiate; you owe the government money and they want it.

They can seize assets (your vehicles, your home), they will make your life a living nightmare.

They only have one job - collect the taxes; they cannot offer you a ‘deal’, they cannot offer you a ‘settlement’, these are not allowed under the Income Tax Act.

All you can do is try to get ahead of the situation and avoid letting it get out of hand.

Already in trouble or see your business going down this precarious path?

We can help. Contact your local Ledgers Professional Today, we can work with CRA on your behalf and help save your business.

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