A tax problem can quickly become a tax emergency.
Unresolved tax disputes with the CRA pose significant risks to taxpayers. The CRA has sufficient powers to collect tax debt under the various tax acts. Taxpayers facing problems such as past due tax returns, undeclared income, or outstanding tax debt could face harsh consequences including:
- Interest: Unpaid taxes can accrue significant interest, often increasing the tax debt many times higher than the original amount. Interest charged by the CRA is compounded daily and is set at a rate much higher than that offered by financial institutions. In most cases, interest accrual cannot be stopped until the entire debt is paid in full.
- Penalties: The CRA often levies financial penalties on filing errors and/or omissions, including late filing penalties, repeated failure to report penalties, and gross negligence penalties which can be as high as 50% of the understated tax. Penalties are meant to be punitive.
- Prosecution: In cases of significant tax evasion, the CRA can pursue criminal prosecution and routinely publishes information on successful criminal convictions. Under the Income Tax Act and the Excise Tax Act, persons convicted of tax evasion can face fines ranging from 50% to 200% of the taxes evaded and up to two years imprisonment. Upon conviction on an indictment, a fine ranging from 100% to 200% of evaded taxes and up to five years in imprisonment can be imposed.
- Enforcement Action: The CRA has a variety of legal powers to collect an outstanding tax debt. These powers include:
- wage garnishments,
- bank account seizures,
- liens on your home, vehicle and other property,
- RRSP, RESP seizures,
- garnish company receivables, and
- pursue directors of corporations for corporate tax debts.
It is never beneficial to ignore outstanding tax debts. Focused Tax Strategies can help resolve your tax problems before it turns into a tax emergency. Our expert staff work with you to create a personalized solution that ends your tax problem considering your personal, professional and financial interests.
Don’t hesitate to contact us today at 604 558 2234 to set up a confidential consultation.