Steep business losses led to a major problem paying taxes

CRA Collection Problems
Hamilton, Ontario

What Happened?

I started a small business. I didn’t bother withholding taxes because I was able to pay the amounts I owed upon filing each year. Each year my revenue increased until last year when it fell through the floor. I took a wave of contract cancellations, leaving me earning 30% of what I had been used to. Then my tax filing came due and I had to repay tax based on the higher earnings and because I had not been in the habit of holding back, I was in a serious problem. I ended up owing over $100,000 to the CRA between income tax and HST. I filed my returns to avoid penalties and kept hoping I would earn more to pay them down, but I didn’t. That’s when they started harassing me. I was sure if I didn’t do something they were going to place a lien on my home.

The Solution!

I explored different solutions. A tax lawyer wanted me to pay them $5,000 to make a taxpayer relief application to get me relief of interest, but in reality even with that I didn’t have the money to pay the CRA. I ended up filing a Consumer Proposal, which stopped the interest on my tax debt from accumulating. I ended up having to only repay 50% of what I owed and was able to continue doing business. Because I addressed everything before the CRA placed a lien on my home, I avoided that and was able to keep my home lien free.