Does Your Business Owe Money to The CRA?
One area DEROTTO Leasing specializes in is CRA debt financing. If your business owes money to CRA for income tax, payroll tax, GST/HST, or a combination of the three DEROTTO Leasing may have a solution. We work with several financing partners that can help resolving your CRA debt.
There are only 2 options your business has when it owes money to CRA – deal with it or ignore it. It may sound obvious, but ignoring CRA is the worst thing you can do. Unfortunately this is what many business owners initially do until they are at the end of their rope. The best way to address this issue is to be proactive and find a way to come up with the money to pay the debt.
There are basically 3 options your business has if it owes money to CRA:
Write a cheque to CRA to cover the debt.
If Option #1 is not available, then you can:
Negotiate a repayment schedule with CRA. This may make sense initially, but unfortunately CRA can change the parameters whenever it wants and CRA may report to the commercial credit bureau of your business until the debt is paid in full. Having CRA on the commercial credit bureau of your business is never a good thing. It may significantly impede the borrowing capacity of your business until your CRA debt is settled.
Secure financing with a 3rd party lender. This is a better options than Option #2 as you have all of the control. Once a lending structure has been negotiated with a financing company it will not change for the duration of the finance term (assuming you keep your loan in good standing). This option also prevents CRA from potentially reporting a negative comment on the commercial credit bureau of your business.
Whatever you do don’t ignore CRA. Listed below are some answers to “What will CRA do if I ignore my CRA debt?”:
CRA has a variety of option it can pursue to recover the money you owe. These recovery options, as described below, may result in serious financial or legal consequences for you.
CRA can issue a statutory set-off. For example, the CRA may offset your goods and services tax/harmonized sales tax (GST/HST) credit cheque to reduce or pay your outstanding debt.
The CRA can issue a garnishment to intercept funds held for or payable to you by a 3rd party. The CRA sends a requirement to pay to the 3rd party to have all or part of your payment redirected to them to be applied against your outstanding debt.
Certifying your debt in the Federal Court of Canada:
The CRA can legally register your debt with the Federal Court of Canada and get a certificate confirming the amounts you owe to the Crown. Once registered, the certificate has the same force and effect as a judgment obtained in a court and makes your debt a matter of public record.
Seizing & selling your assets:
The CRA can get a writ or memorial and seize your assets and property of your business and have it advertised and sold by a court enforcement officer. If this happens your business will be responsible to pay all reasonable costs incurred by CRA, as well as any balance that remains after the proceeds of the sale have been applied to your debt.
Holding a 3rd party jointly responsible for your debt:
The CRA may hold a 3rd party jointly responsible for your tax debt. The 3rd party could be your spouse, a business partner, or a related corporation. For example, if a corporation has not remitted its GST/HST debts or source deductions, the CRA can hold the directors of that corporation jointly responsible for the corporation's debt.
None of the above options are good, but if you leave CRA no choice they can make a mess of your business you've taken years to build.
If you are interested in learning more about this topic contact Darryl at 855.337.6886 x1 or email firstname.lastname@example.org.
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