Is it possible to make a deal with the Canada Revenue Agency or CRA (formerly Revenue Canada) for taxes you owe?
Yes, it is possible to make a deal with CRA, but it is difficult, and professional advice is often helpful. Here is the process.
First and foremost, CRA will NOT negotiate with you until you have filed all outstanding tax returns, because until your tax returns are filed, they cannot determine how much you owe.
Negotiate Payment Terms with Revenue Canada
Next, if you owe Canada Revenue Agency and cannot pay your full tax balance immediately, it may be possible to negotiate payment terms with CRA. Contact your nearest Canada Revenue Agency office. Explain your situation, and propose a tax repayment plan. For example, if you owe $5,000, you may offer to pay $500 per month for the next ten months. It will be up to CRA to decide if they will accept your offer, or take further action against you to collect the taxes owing.
Remember that if CRA agrees to accept your payment plan, you will continue to be charged interest until the debt is paid in full. In most cases CRA will accept a payment plan if your taxes will be paid within the next twelve months.
If you are not able to work out a repayment plan, CRA has the power to withhold future tax refunds, GST credits, and even child tax credits until the debt is paid. They can also garnishee your wages and seize your bank account, so government debts should be treated very seriously.
Will Revenue Canada accept than the full amount owing?
By law, CRA cannot accept less than the full amount owing, because if they make a deal with one taxpayer, they will be under pressure to make a deal with everyone else.
The only circumstance where CRA will accept less than the full amount owing is if you file a proposal. Even then, CRA will only accept your proposal if you are offering more in the proposal than they would receive in a bankruptcy, and if you have filed all outstanding tax returns.
Getting CRA to accept a proposal is complicated, so it you live in Ontario, contact a nearby expert today for more information.