Taxes or tax debt making you stressed or tired yet? I know I have been both tired and stressed over the past few months. Taxes this year have been unlike any I have experienced since starting to work at Rise Calgary. The Covid-19 Benefits have caused a lot of concern for many tax filers, and many have found themselves owing taxes for the first time in years. I have been asked many times; What do I do? How am I going to pay this back? And I understand, living on less than $25,000 a year does not leave room for an additional debt. So where do we go from here?
Like you, we had to learn about the Covid-19 benefits like CERB and CRB, and how they would affect clients’ taxes. While we don’t have all the answers, nor do we have any quick fixes, we did find a few things that you can do to hopefully give you some relief from paying penalties and interest on the debt you now find yourself owing.
First things first. If you were one of the lucky ones and were able to file your taxes by April 30th of this year the government has stated that you will not be required to pay any interest on the debt until April 30, 2022. This is good news. One thing though, if you owed debt prior to filing your taxes for the 2020 Tax year, the pre-existing debt will not receive the same interest relief and penalties and interest will keep accumulating on that original debt.
So, you ask, what if you were not able to get your taxes done by April 30th? An excellent question. The answer is that Canada Revenue Agency has a Taxpayer Relief Provisions process that you can apply for. If you find that you are unable to pay or make payments on the tax debt owing you can apply for these provisions if you meet one of these criteria:
These include:
Exceptional circumstances;
The actions of the CRA;
Inability to pay or financial hardship
In my experience here at Rise Calgary, the one that I find applies the most is that of “Inability to pay or financial hardship.” You are not alone. Many people are finding themselves in financial hardship either due to a decrease in work hours, loss of a job and yes because of tax debt.
If paying the debt would put you in financial hardship and would affect your ability to afford basic needs like food, shelter, and transportation, or you match any of the other criteria listed above, then you qualify to apply for this provision.
I’m not going to try and tell you this process is easy. It will require some work on your part. You would need to do what is called a ‘full disclosure’ to the Canada Revenue Agency. That means you would have to complete a document that outlines all your income and expenses for the year/month. The idea behind this is to show that your income is low enough that once you pay all your bills, purchase food, pay rent/mortgage that there is not enough money left over to pay any additional debt.
As always, it is best to contact CRA if you have any questions and to ensure that you have all the information you need to proceed. To make this a bit easier for you, I have included at the bottom of this blog, the link to the webpage that will give you more information about the Tax Relief Provisions processes and their phone number.
Lastly, once you have arranged a payment plan with the CRA, please ensure that you keep up with the agreed upon payment plan. If you feel that you might miss a payment, contact CRA, let them know and they will work with you. Failure to do that, could lead to a dissolving of your agreement and the debt being owed in full.
Please know we are always here to help support you through this process or assist you in accessing basic needs resources. You only need to give us a call. 403-204-8280
If you would like more information or want to talk to a CRA representative about your situation, you can call them at 1-888-863-8657.
Link to the Tax Relief Provisions page:
Link to Payment Plan Page:
Darlene Doskoch – Manager Rise Calgary
Gareth Jones – Marketing & Administrative Support Rise Calgary