Covid 19

Are you able to pay your tax bill?

The COVID-19 impact lead to sudden unemployment, reduced work hours that was mitigated somewhat by the availability of a number of federal and provincial benefits. However, given the circumstances, it’s very likely that the number of Canadians who won’t be able pay their tax bill this year on time and in full will be significantly increased.

Most Canadians who have the financial resources to pay their taxes in full may be reluctant to use up limited resources on tax payments when their employment and financial future are uncertain.

In the previous years, the filing and payment deadline for Canadian taxpayers other than self-employed individuals, have been the same day as April 30th. However, this year, a tax balance owed for 2019 doesn’t have to be paid until September 1.

Due to the unprecedent times, the CRA is open to making a payment arrangement with the taxpayer to pay taxes owed over time in a method of installment payments, if a taxpayer is unable to make a payment in full and is out of available resources and have reasonably tried to get the necessary funds by borrowing or rearranging financial affairs.

 

There are a number of ways to make a payment arrangement.

The first is a call to CRA’s TeleArrangement service at 1-866-256-1147. When making a call, the taxpayer will need to provide his or her social insurance number, date of birth, and the amount entered on line 15000 of the last tax return for which the taxpayer received a Notice of Assessment. The TeleArrangement Service is available Monday to Friday, from 7 a.m. to 10 p.m., eastern time.

The second method will be to call CRA’s Debt Management Call Centre at 1-888-863-8657. The agents are available Monday to Friday (except holidays) from 7 a.m. to 11 p.m., eastern time.

The CRA also provides an online tool, in the form of a payment arrangement calculator (available at https://apps.cra-arc.gc.ca/ebci/recc/pac/prot/welcome?request_locale=en_CA), which allows the taxpayer to calculate different payment proposals, depending on his or her circumstances). That calculator includes interest charges since, no matter what payment arrangement is made, the CRA will levy interest charges on any amount of tax owed for the 2019 tax year which is not paid on or before September 1, 2020. Please note that the interest charged by the CRA on outstanding tax amounts is, by law, higher than current commercial rates and are compounded daily.

Therefore, where at all possible, a taxpayer is likely better off arranging private borrowing in order to pay any taxes owing by the September 1 deadline.

Finally, in all cases, regardless of the payment or filing deadline and no matter what the circumstances or amount owed, the right answer is to file one’s tax return on time and, if payment of taxes owed can’t be made, to get in touch with the CRA as soon as possible to make a payment arrangement.

*The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.