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TAX TIP How to find help if you can't pay your taxes

Wednesday, 13 April 2022 12:00.PM
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If you're struggling to pay your tax debt, we understand and are here to help regardless of your tax situation. If you ignore your tax debt, it will grow with interest charges and penalties. Instead, let's work together to figure out what your options are based on your financial situation.

Please note that penalties only apply if you file late or pay by instalments and your instalment payments are late or less than the required amount. Debts associated with COVID-19 Individual Emergency Benefits overpayments will not have penalties or interest assessed against the amount owing.

The tax-filing deadline for most individuals is April 30, 2022

Since April 30, 2022, falls on a Saturday, your return will be considered filed on time in either of the following situations:

• we receive it on or before May 2, 2022
• it is postmarked on or before May 2, 2022

You have until June 15, 2022, to file your return if you or your spouse or common law-partner are self-employed.

The payment deadline is April 30, 2022

If you have a balance owing, your payment is due on April 30, 2022. Some taxpayers may receive Notices of Redetermination from the CRA over the next two years that are related to Individual Emergency Benefits overpayments. If you receive such a notice, you should follow the payment directions provided in the letter.

If you or your spouse or common law-partner are self-employed, your payment is still due on April 30, 2022.

Since April 30, 2022, falls on a Saturday, in both of the above situations, your payment will be considered paid on time if we receive it, or it is processed at a Canadian financial institution, on or before May 2, 20227.

If you filed your 2020 return and qualified for interest relief, you have until April 30, 2022, to pay any outstanding income tax debt for the 2020 tax year to avoid future interest charges. This applies to the tax owing for the 2020 tax year only, and not for any previous tax year.

Partial payment

You can make partial payments to the Canada Revenue Agency (CRA) to reduce the amount of interest you need to pay on unpaid amounts. To see all the payment options or to make a partial payment, go to canada.ca/payments.

Payment arrangement

If you can't pay your taxes in one payment, you may be able to set up a payment arrangement with us. A payment arrangement is an agreement between you and the CRA. It allows you to spread out your payments over time, based on your ability to pay, until you've paid your debt and interest in full. In order to help Canadians during the COVID-19 pandemic, the CRA has expanded its payment arrangement rules. These expanded rules are still in effect. You can work with us on a payment arrangement that fits your situation.

We may also apply credits or refunds towards outstanding debt to reduce the amount owing.

You can also find what you can afford to pay on a regular basis with the help of these optional budget tools:

• Income and expense worksheet
• Payment arrangement calculator

To make a payment arrangement, contact the CRA as soon as possible.

TeleArrangement service

You can also make a payment arrangement by calling the CRA's automated TeleArrangement service at 1-866-256-1147. When you call, you'll need to give:

• your social insurance number;
• your date of birth; and
• the amount on line 15000 of your last notice of assessment.

The TeleArrangement service is available Monday to Friday (except holidays), from 7 a.m. to 10 p.m., Eastern time.

You can also call the CRA's debt management call centre at 1-888-863-8657 to speak to an agent. Agents are available Monday to Friday (except holidays) from 7 a.m. to 8 p.m., Eastern time.

Pay by pre-authorized debit

You can authorize the CRA to withdraw a certain amount directly from your bank account, on dates of your choosing, through one of the following:

• My Account
• My Business Account
• The MyCRA mobile web app

You can set up a pre-authorized debit or generate a QR code for paying at a Canada Post outlet.

Keep in mind it takes five business days from when you first set up a pre-authorized debit to when your funds will be processed. Also, you can't cancel the debit agreement within the five days before it's due. To use this service, you need to register for My Account, My Business Account or the MyCRA mobile web app.

Unable to pay?

You must tell the CRA as soon as possible so that we can work with you to find a workable payment arrangement. Keep in mind that interest compounds daily, at the rate set by law, until you pay the amount you owe in full. Go to When you owe money – collections at the CRA for more information.

In some circumstances, you may ask for relief from penalties and interest, and reduce the amount you owe. Go to canada.ca/penalty-interest-relief for more information.

In most cases, you don't have to pay income tax amounts that are in dispute until the CRA has completed its review of your objection. For income tax appeals filed with the Tax Court of Canada, we'll usually postpone collection action on amounts in dispute until the Court renders its decision on your appeal. Note that interest charges still apply to an amount owing while it's in dispute. You can pay all or part of the amount in dispute to avoid paying more interest on what you owe.

Keep receipts and documents

Keep supporting documents and all required records for six years from whichever date is later:

• the end of the tax year to which they relate
• the date your return was filed (if you did not file your return on time)

Sometimes the CRA reviews returns to make sure that income, deductions, and credits are properly reported. If the CRA reviews your return, having your receipts and records on hand will make it easier for you to support your claims.

SOURCE: Canada Revenue Agency

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