Tax Debt and Bankruptcy Lawyer in Toronto, Ontario

In Canada, tax debt refers to the monies owed to the government by individuals or businesses who haven't met their tax obligations on time. It's the responsibility of the Canada Revenue Agency (CRA) to collect these debts. The tax debt inventory is actively managed by the CRA, with new amounts continually being added while others are collected or addressed through other measures.

Several factors contribute to the increase in tax debt across the country. These include a higher population and more businesses leading to increased overall revenue, the harmonization of federal and provincial taxes, more effective measures against aggressive tax planning and transfer pricing, and interest charges on outstanding debts, which are added to the debt. The CRA has been fairly successful in improving its tax collection program to prevent debt from occurring or resolving it before legal action is required. However, you may find yourself faced with tax debt nonetheless. 

In Canada, tax debt is a serious issue that can have far-reaching consequences. If not handled promptly and appropriately, it can result in severe penalties such as hefty fines, interest charges, and legal action. Contact Matthew R Harris Law P.C. when you are ready to move forward. Understanding the implications of tax debt and being aware of the avenues for resolution is crucial, so set up a consultation as soon as possible. 

Bankruptcy and Tax Debt in Canada

Tax debt refers to the amount of money a taxpayer owes to the government due to unpaid taxes. These unpaid taxes can be from various sources, such as income tax, sales tax, property tax, or even business taxes. The Canada Revenue Agency (CRA) is responsible for collecting these taxes and ensuring that taxpayers are compliant with their tax obligations. 

When tax debt becomes overwhelming, bankruptcy could provide a way out. Bankruptcy is a legal process governed by the Bankruptcy and Insolvency Act (BIA) in Canada. It allows individuals or businesses to eliminate or restructure their debts when they're unable to repay them. Filing for bankruptcy can provide relief from mounting tax debt and stop constant harassment from creditors. 

When an individual or business files for bankruptcy, their assets are liquidated to repay their debts. However, under the Execution Act in Ontario, certain essential assets can be retained, such as residence, vehicle, tools of the trade, clothing, furnishings, and appliances, and farming instruments—up to a certain dollar limit.

Consumer Proposals

Another option to consider is filing a Consumer Proposal. This is a reorganization of the unsecured debts owed to creditors. It allows for a lower total amount owed and provides a longer period of time, up to 60 months, to repay the reorganized debt. A Consumer Proposal can be a viable alternative for those who want to avoid bankruptcy but still need assistance in managing their tax debt. 

Additional Paths Forward

If you find yourself in tax debt, the following are some additional options for managing it: 

• Voluntary Disclosure Program: If you have made a mistake on your tax return, you may be able to use this program to correct it and avoid penalties. 

• Taxpayer Relief Provisions: The CRA may waive or cancel penalties and interest charges if a taxpayer can demonstrate that they were unable to meet their tax obligations due to circumstances beyond their control. 

Of course, seeking legal guidance is key, no matter what path you may want to pursue. Reaching out to an experienced lawyer is always in your best interest when you find yourself overwhelmed by debt of any kind. 

Understanding Creditor and Debtor Rights

When dealing with tax debt and bankruptcy in Canada, it's important to understand the rights of both creditors and debtors. Both of these entities have rights and responsibilities. For instance, creditors have the right to collect the debts owed to them, but they must do so within the boundaries of the law. They cannot engage in deceptive, abusive, or threatening practices when collecting debts. 

Debtors, too, have rights. They have clear rights that protect them from unfair treatment by creditors. They have the right to be free from unfair, abusive, and deceptive tactics from debt collectors, and they have the right to be treated with respect and in a fair manner. In fact, debtors can request that collection agencies stop contacting them and can dispute inaccurate or wrong debt reports. They also have the right to sue creditors or debt collectors for violating their rights.