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Negotiating with the CRA

September 5, 2017

Negotiating alternatives payment arrangements with the CRA is a daunting task for everyone including Insolvency Trustees.

In the insolvency world things change somewhat by dealing with a formal proceeding and Insolvency Trustee’s do find the CRA is more inclined to come to the table to talk about alternative arrangements. But as a business owner or a consumer tax debtor there is little or no negotiation room available.

The CRA will not often voluntarily reduce interest or penalties on accounts, well except for the very rich.

Collection policies that involve the seizure and freezing of accounts can subvert good will arrangements and force businesses to close and seek formal proceedings to resolve what might otherwise be salvageable situations.

Formal proposals involving the CRA can also be cumbersome and challenging leaving the errant debtor constantly facing the prospect of a bankruptcy proceeding. Should they miss a remittance or fall even slightly behind the proposal can be deemed annulled. Proposals typically last five years so they aren’t for the faint of heart.

Remember, if you do make a proposal offering to deal with outstanding taxes you are making payments with after tax dollars so for example if your monthly payment were $500 you may have to earn $1,000 to have that $500 available (after taxes) to be used to pay taxes so you may have to significantly increase your bottom line to maintain payments throughout the proposal.

Proposals can be good solutions but they are no panacea and bankruptcies are easier to utilize because they take the negotiations almost entirely off the table.