Tax debt solutions
There are several ways to put an end to your tax debt. The three main ones are: enter into a payment arrangement with Revenue Quebec and the CRA, file a consumer proposal or declare bankruptcy. Contrary to popular belief, tax debt can in fact be included in the last two strategies.
Payment arrangements
Contact Revenue Quebec and the CRA as soon as possible. Generally, these institutions are open to making an arrangement with people who have tax debt. You can spread your payment over several months. However, the longer you take to pay, the more interest charges will be added to your balance.
If a situation beyond your control (serious illness, catastrophe, loss of employment, etc.) prevents you from paying your taxes, the CRA and Revenu Québec may be able to lighten your debt by waiving the interest and penalties.
Consumer proposal
A consumer proposal is a negotiation with your creditors that allows you to partially repay your debt over a period of up to five years. You don’t have to file for bankruptcy. This arrangement allows you to pay off all your unsecured debts (credit cards, lines of credit, tax debts) in one monthly payment based on your budget.
For more information, consult our section on consumer proposals
Declaring bankruptcy
Bankruptcy can be used when no other solution is possible. It allows you to get a fresh start by eliminating all your debts. Bankruptcy protects you from most lawsuits or wage garnishments and prevents you from having your telephone or electricity services cut off. You should know that filing for bankruptcy doesn’t mean losing everything. Many assets are exempt from seizure, such as your home or your car.
For more information, consult our section on bankruptcy. In any case, if you can’t pay your tax debt, consult a Raymond Chabot licensed insolvency trustee who can help you determine which solution best suits your financial situation.
Advantages of filing an income tax return
Filing your taxes doesn’t mean there aren’t upsides. You can:
- Be refunded for source deductions
- Receive the Canada Workers Benefit
- Receive the Canada Child Benefit
- Receive the Goods and Services Tax (GST) Credit
- Receive the Guaranteed Income Supplement
- Be refunded for contributions to the QPP/CPF, QPIP and employment insurance
- Split your pension income with your spouse
Based on your personal situation, you could also be entitled to the solidarity credit or other types of allowances. In short, by not filing your tax return (even if you have no income to declare), you could be depriving yourself of additional income.