Protecting Your Information from the CRA
When it comes to debt collection, the Canada Revenue Agency (CRA) is very different to deal with than your average creditor. That’s why you need to know your options before you deal with them.
The CRA has different collection powers than most collection agencies. For one thing, they typically do not need a court order to take powerful collection actions against you. They can contact your employers (or clients, if you are self-employed) to garnish your earnings, freeze your bank accounts, and even place liens on assets, like your car or home.
They can also garnish more. Most creditors can take up to 20% of your earnings, but the CRA can garnish up to 50%.
If collection action has already started, there are several options you can take, to stop the CRA, but you can’t reverse what has already been done. What about preventing CRA collections before they’ve even begun?
In order to start collection action, the CRA has to know where to collect from. For example, the CRA can only freeze your bank account if they know where you bank. And most of the time they find out that information directly from one source — you.
One of the most common ways the CRA gets your personal information is through a financial disclosure form. Here’s a scenario that happens frequently:
- You can’t pay your taxes in full and you contact the CRA to arrange a payment plan.
- The CRA asks you to fill out a financial disclosure form.
- This form asks for information about your income, income sources, assets, liabilities, banking details, and more.
Even if the CRA accepts your payment plan for this year, they now hold all of your information for the future. If you are ever late filing again, or can’t pay the following year, they now know where to collect from.
Should CRA not accept your payment plan, they will also have the information they need to use their powerful collection powers.
That’s why it’s so important to first know your options!
So, what should you do to protect yourself?
- Don’t attempt to negotiate with the CRA on your own.
- Always speak to a third-party financial professional for help.
- Learn about your other options before it’s too late.
The best way to protect yourself is to work with a professional to deal with your tax debt. At Fuller Financial Solutions, our financial consultants can help you choose a plan to fulfill your tax obligations and even stop collection action that works for you.
Contact us today for a free consultation. Call 416-927-7200 or visit www.fullersolutions.ca.
Download our free eBook, How to Make a Settlement with the CRA. Get your copy here: https://www.fullersolutions.ca/make-a-settlement-with-the-cra/.