Entrepreneurs: Tax Debt? Here’s What to Do

Whether you’re self-employed or own an SME, you or your business might have accumulated tax debt over the years… and accrued significant interest if you filed late! Good thing there are solutions to get back on track.

In short

Are you unable to make payments? Act now!

  • Contact Revenu Québec or the CRA
  • Request a payment arrangement : Once you’ve explained your situation to the government, you will jointly set up a schedule to repay your debt over a longer period.
  • Request a relief arrangement : If events beyond your control have prevented you from paying your business tax (illness, accident, job loss), you may qualify for a tax relief arrangement. Your interest and penalties could then be erased.
  • Contact a licensed insolvency trustee : If these solutions do not suit your situation, a proposal or bankruptcy can also be options.

Not paying your tax debt on time can cost you dearly because interest will be added to the amounts you owe, in addition to the penalties applicable to your debt. It’s best to act quickly rather than let the situation get worse—especially since the Canada Revenue Agency (CRA) and Revenu Québec can undertake several measures to recover amounts due to them. They could, in particular:

  • Withhold tax credits
  • Seize money from your bank account
  • Seize a portion of your salary
  • Make you pay the penalties
  • Terminate your tax numbers (GST/QST)
  • Ask your clients to pay what they owe you directly to Revenu Québec or the CRA

Instead of sitting on your laurels, telling yourself that you’ll find a solution later, face your problems and take action!

1. Contact Revenu Québec or the CRA

Notify both government levels of your situation in order to find an arrangement. Because you can definitely find one.

2. Request a payment arrangement

Once you’ve explained your situation and proven that you will be able to pay back the amount owed, you may be able to conclude a payment arrangement in accordance with the applicable standards. You will however have to make sure that you will be able to comply. The best way to do this is to include the payment in your financial forecasts. Our experts can help you prepare them.

3. Request a relief arrangement

Have you been seriously ill or the victim of damages? Have you lost your job? If events beyond your control have prevented you from paying your business tax, you may be entitled to a tax relief arrangement. In this case, your interest and penalties could be erased. Consult a tax specialist or accountant as needed. They can help set up your file.

4. Contact a licensed insolvency trustee

If these solutions don’t suit your situation, there are other options for you to get out of debt:

  • A proposal or consumer proposal, which consist in negotiating the repayment of a portion of your debt with your creditors without filing for bankruptcy. Your licensed insolvency trustee will take care of preparing the documents needed and will guide you throughout the process.
  • Commercial or personal bankruptcy : in some cases, bankruptcy may be the only way out. So, it’s best to surround yourself with good people to make sure the process runs smoothly.

In conclusion, don’t wait to act. The quicker you try to settle your debt, the sooner you will find financial serenity (and the peace of mind that goes with it). By contacting us, you could avoid bankruptcy. Contact one of our licensed insolvency trustees. They are the best qualified people to help you.

Is your SME experiencing financial difficulties and you can’t see your way out? Book an appointment with one of our recovery and reorganization experts. They will help you find solutions. It’s confidential, judgment-free and the first meeting is free.

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