For self-employed people, the tax filing date has not changed and taxes must be filed by June 15, 2022. Any payments for the current tax year are due by April 30, 2021, which applies to balances and installments in accordance with Part 1 of the Income Tax Act. For everyone else, the payment date and submission date is April 30, 2022. When you are self-employed and do not have tax deductions on your checks and have not made any other provisions to cover your tax debt at the end of the year, you may have a problem. Tax debt is serious and needs to be addressed immediately. The Canada Revenue Service has extended powers when you owe it money. If you owe them, they will find a way to collect. They charge fines and interest on your overdue taxes. They can withhold payment of child tax credit and GST deduction. They can withdraw money from your bank account or garnish your salaries. If you own real estate, CRA can sign a lien on your property if what is owed to them is outstanding for a long time. This is to guarantee that you will pay off your outstanding debt. When a mortgage is registered on your property, it can prevent you from refinancing or selling your property until the outstanding debt is fully repaid. An important point to keep in mind is that if you are self-employed and your income tax is not current, you will not be able to secure mortgage financing to buy a home, buy a holiday property, transfer your mortgage or to access shares in your property. Even our alternative and private lenders will not prepay a mortgage unless any overdue CRA tax arrears are paid in full. Canadian banks and credit unions will not provide unsecured loan to pay off their income tax debt and will generally not be able to refinance an existing mortgage to cover their debt. OAPI generally does not accept any arrangements other than full payment and this is due and paid at the time of your evaluation or reassessment. They can not create a precedent that would allow them to accept less than everyone else. They have one of the highest collection rates in Canada, as our taxes finance public goods and services. So what do you do if you can not pay them in full? Contact them immediately. You may be able to negotiate a payment plan if you can not pay the full amount, but generally will not leave it pending for more than a few months. Be aware that they will continue to charge interest and penalties on the overdue amount. It is important to note that if you file for bankruptcy or submit a consumer proposal, it does not bind your property. If you go bankrupt for your CRA debt, the mortgage remains and – even worse – raises interest over time. Even after you are fired from bankruptcy, the privilege remains in effect until you finally sell your home. If you are a homeowner, then having an experienced mortgage broker working for you can save you time and money when looking for a solution to your CRA problem. If you just can not pay the full amount of your retroactive taxes, consider refinancing your mortgage and using the equity in your home, a home equity loan may be included which may include arrears and other debts. Mortgage brokers have access to lenders that will allow them to refinance their existing mortgage or mortgage options to repay their outstanding CRA debt. If you are a homeowner and are having trouble repaying those owed to OAPI this year, call me to discuss at 1-888-561-2679 or email me at: [email protected]. This article was written by or on behalf of an outsourced columnist and does not necessarily reflect Castanet’s views.
