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Managing back taxes and tax debt
Tax debt is a problem that can sneak up on you very quickly. It can cause you headaches in the present and in the future if you don’t know how to deal with it. Luckily, there is debt help available in Toronto and across Southern Ontario from a Licensed Insolvency Trustee (LIT) such as Harris & Partners Inc.
What is tax debt?
Tax debt results from owing money on your income taxes after you have filed your tax returns. Generally, you should be able to work out a payment plan with Canada Revenue Agency, but in the event that you are not, other options are available.
What are your tax debt relief options?
The first step to dealing with tax debt is to file any outstanding tax returns. Many people feel overwhelmed and confused by doing this, but you don’t need to worry – there are several options available to help, including software and CRA guides. It is important to file even if you think you owe money. Failing to file your taxes properly can incur additional fees, leading to a greater amount owed. If you find that your debt is over $10,000, then you should get an accountant or tax preparer to review your returns and ensure you are taking advantage of all the possibilities under the Income Tax Act to reduce what you owe. If you are genuinely unable to pay at all, then you have a few options available to you:
1. Apply to the CRA under Taxpayer Relief Provisions
2. File a consumer proposal
3. File for bankruptcy