Archive for Category 'Tax Debt', page 2

Question: Hi,Thanks for reading my question, I live in the province of Quebec. My question is that I have 2 companies that owe GST and PST. Between both I would say close to $200,000. Personally I owe about 30,000 in credit card debt. We (wife and I) have a 200K mortgage, house value is around 350K. I also have 20K of RRSP. My car is a company lease. I am thinking of closing and bankrupting both companies as I will never be able to catch up. Should I go personal or corparate bankruptcy? I figure 50% of the net value of the house is mine around $75K. How does it work? Do I have to sell my portion of the house to my wife so the house is not affected?
Any option will help as this is causing a big stress on our relationship. Thanks

Answer: In almost all cases the correct answer is for you to file personal bankruptcy, not corporate bankruptcy.  Here’s why: To hire a trustee to bankrupt your corporation could easily cost you $10,000 or more (trustees like to get paid); it’s an expensive process because in a corporate bankruptcy the trustee must notify all creditors, place an ad in the newspaper, hold a creditors meeting, and perform many other procedures.

Once the corporation is bankrupt, GST and PST will then pursue all directors of the corporation personally for the unpaid amounts.  You may then need to go bankrupt personally as well, so there is usually no point in also bankrupting the corporation.

With respect to your personal situation, it appears that your house has equity of $150,000 ($350K – $200K), so you are correct that your share is worth $75,000.  Unfortunately you cannot just sell your portion of the house to your wife and then go bankrupt.  You are required to disclose to the trustee all dispositions of real estate that you made within the last five years, so even if you sold the house to your wife today and then went bankrupt tomorrow, the trustee would still want your $75,000 share of the house.

There are a number of options to deal with this, including having your wife get a second mortgage for $75,000 and buying you out (so that you have the $75,000 to pay into your bankruptcy estate), or perhaps to use to file a proposal under Division 1 of the Bankruptcy & Insolvency Act.

As you can see the options for dealing with this situation become very complicated, so expert advice is necessary before you decide how to proceed.  We strongly advise you to consult with a bankruptcy trustee to help you determine the best course of action.

Question: In 1990-1992 I lived in Quebec but did not pay my Quebec income tax. I moved away from the province and the debt was never chased up (I did pay the Federal portion)
Will I still owe this money or is there a statute of limitations on provincial income tax debt? I am terrified of what the amount must be with interest owed.

Answer: In general, tax debts do not go away.  However, since 15 years have passed, and the government has not attempted to find you for 15 years, it is possible that you don’t owe as much as you remember.  The only way to determine if you owe anything will be to contact the Quebec government.  Alternatively you could contact a tax accountant in Quebec and ask them to investigate on your behalf.

Question: If you owe money to Revenue Canada, but you don’t fully own your home, what if any can they take from you? ie. your home, car etc.

Answer: If you owe taxes, Revenue Canada has the power to seize your bank account, put a lien on your home, and garnishee your wages.  If you are unable to work out payment arrangements with Revenue Canada,  to prevent these collection actions it may be necessary to file a consumer proposal or personal bankruptcy.

Question: i came to guatemala in 2002 from canada without filing taxes for that year, and just a week ago my ex. who lives in canada receive a register letter from rca requieren me to contact them withim 30 days or theywill start legal procedures . i got not job , saving or assets to enable me to payany taxes due in the near future. part of the informacion of earnings for that year are lost and incomplete. i dont plan to go back to canada in the near future neither to work or live,but i would like to settle this issue with rca. i need information on the best aproach to take.if rca takes legal action , what are the legal implications ? would i be to visit my children?

Answer: The simplest solution would be to contact Revenue Canada and tell them that you are no longer living in Canada.  Ask them to send you copies of whatever T-4s and other information slips they have on file for you for 2002, and then use that information to file your taxes.  Once the taxes are filed you can then make arrangements to pay them.  If you can’t pay them, there is not much they can do, since if you are not in Canada and don’t have any wages, they cannot garnishee your wages.

Question: I live in canada and i owe 20 000 for income taxes and a student loan which i don’t know how much it is now and bad credit cause i did not fufill the agrements each month. i need to do something fast to get this fix so i can reclaim my credit and name and i want to go to edmonton to work as a subcontractor for a drywall company that my friend offered me. for that i need 10 000 to get their a get settled.i hope theirs an answer for every question that i asked. thank you

Answer: If you have more debt than you can handle, you have a few choices.  We suggest you seek professional advice, either by contacting a credit counsellor or a bankruptcy trustee.  For debts to Revenue Canada, you will either need to make a repayment plan directly with them, or try a consumer proposal or personal bankruptcy. 

As for getting the money to move to a new city, if you have poor credit you will probably not qualify at a bank, and therefore will probably need to rely on family or friends for help, or see if your new employer can provide you with assistance to get you started.

Question: I realize that if I earned the money then I have to pay the tax. But what if the amount owing includes large penalties and interest, can the penalties and interest be negotiated in lieu of paying the actual tax

Answer: Revenue Canada (CRA) will not negotiate on the principal amount of tax owing.  It may be possible for them to reduce some of the penalties and interest owing if you can prove to them that it would be a hardship to pay them.

The only way CRA may agree to accept less than the full amount owing is if you file a consumer proposal, although it is becoming increasingly difficult to get CRA to agree to a proposal; in many cases it is easier for them if you file for personal bankruptcy.

More information can be found in our article about how to settle tax debts.  As this is a complicated area, and CRA has different policies across Canada, we strongly recommend that you contact a bankruptcy trustee for more information.