Have you been CERBed?

_{By Bromwich+Smith Staff | 487 words | Reading Time: 2 minutes and 28 Seconds | Date: 2022/05/17}

Owing money to the CRA (Canada Revenue Agency) for many people is probably one of the most stressful financial challenges that they face. There are many ways you can wind up in tax debt, such as not filing your personal income tax returns, failing to pay taxes on business income, HST payments for the self-employed, or inadequate payroll deductions from your employer if you work multiple jobs.

As well a lot of our fellow Canadians were impacted by the pandemic, particularly financially which resulted in using CERB so that they could support their families and themselves. CERB is a taxable income and some of these Canadians are being pursued by the CRA to pay their taxes as they were deemed ineligible to receive CERB after the fact. This is leaving a lot of people feeling overwhelmed, and unable to manage their CRA debt. 

Keep in mind as well, that when you owe the CRA money, they also charge penalties and interest on unpaid amounts. This includes a late filing penalty of 5% plus 1% of your balance owing each month. Given the collection powers of the CRA (which  include: garnishing your wages, seizing your bank accounts, or even registering a lien on your home), the quicker you act on CRA debt, the better. Fortunately, filing for bankruptcy or a consumer proposal in Canada include tax debt, thereby stopping CRA collection actions.

Can the CRA initiate a wage garnishment on tax debt? 

A wage garnishment is defined as a legal procedure in which a court order mandates that an employer withhold a person’s earnings for the payment of a debt. The CRA has the authority to garnishee your wages over tax debt. The amount the Canadian Revenue Agency (CRA) can garnish depends on your filing status, including the number of dependents you have and the amount of deductions you may have overall. 

However, you can be garnished at up to 50 per cent of your income as an employee or 100 per cent as a contractor and the CRA does not need to take you to court to do so. The CRA also has the legal right of offset which means they can recover money owed to them by taking it from your business and personal bank accounts directly.  

Your CRA Debt Options

If you are experiencing CRA debt issues, speak with a Licensed Insolvency Trustees (L.I.T) as they are the only individuals that can negotiate with the CRA on your behalf.  They will examine your financial situation with you and provide the best solution for your specific needs. 

Remember that you are not alone. Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.