In the event that you cannot pay your taxes on time, Canada Revenue Agency may agree to a payment arrangement.
A payment arrangement allows you to pay your tax debts over an extended period of time. The first step to implementing a payment arrangement is to assess how much you can pay each month. You should budget your personal income and expenses to determine the excess that you have available to pay. You should also summarize your assets and liabilities as part of this exercise.
The terms of the arrangement must be approved by an officer in advance. Once you have summarized your income, expenses, assets, and liabilities, you should contact Canada Revenue Agency to discuss the terms of the arrangement. The officer will discuss your options and may request evidence to support your proposed amount. Based on the information provided, they will agree on an amount to be paid on a periodic basis. Interest will continue to accrue during this period.
Once the terms of an arrangement are agreed upon, it is important that you make the agreed payments each month. A payment arrangement can be nullified if you fail to make the payments. You should contact Canada Revenue Agency to see if you can alter the arrangement if you face additional financial hardship that prevents you from making payments. The arrangement may also be subject to a periodic review.
Please ensure that you submit your tax return on time. Even though you are unable to pay the full balance owing per the return, it is best to submit your return on time to avoid late-filing penalties. These penalties can substantially increase your balance owing which will make it even more difficult to pay.
It is best to keep Canada Revenue Agency informed to avoid legal actions to collect. Canada Revenue Agency can take actions such as garnishing your wages or seizing and selling your assets. All collections efforts will be put on hold while the payment arrangement is in place.
We would be happy to help you calculate an amount that will work for you and provide additional guidance on this process.
For more information, please contact firstname.lastname@example.org or 1 844-GYTD-CPA