Do you know the number one mistake owner-managers make when it comes to dealing with the Canada Revenue Agency? It’s tossing aside the letter that comes in the mail rather than dealing with it right away.
Some toss it amongst a pile of papers because they’re too busy to deal with it, others toss it in a drawer out of fear—fear of a tax audit, fear of being penalized or fear of having to make additional payments from money they may not readily have.
But do not, we repeat, do not, put that CRA letter aside and hope it will go away. It won’t. It will only make the matter worse—much, much worse. If it is money owed that you’re ignoring, here’s what could happen:
- If it’s an income tax bill, you’ll continue to be charged penalties and interest on the amount owing, leading to an even bigger bill.
- If it’s HST or source deductions you failed to remit, ignoring it will lead to the CRA freezing your bank accounts in order to collect moneys owed. The government can do that because HST and source deductions are collected through a method called trust accounting—you may have charged it (or withheld it from employees) but it’s not your money, it belongs to the government. You are simply collecting it and holding it in trust until the designated time you are expected to remit. As such, CRA will do whatever it takes to reclaim that money.
What many people don’t realize is that it doesn’t need to come to these extreme measures; when owner-managers receive such a notice, the CRA is willing to discuss accommodations for the bills you don’t have the cash flow to pay. With a payment plan, you’ll still have to pay interest and penalties (on both income tax payment plans and HST/source deduction payment plans) but at least you’ll no longer have to pay the whole bill up front or risk having your bank accounts frozen.
But you have to know how to ask.
Having a professional, like us, negotiate on your behalf is the key because we talk to the folks at the CRA almost every day. We know what’s possible and what’s not when it comes to reaching an accommodation. When business owners make that call, they simply want to make the problem go away, and as they’re often feeling stressed and anxious during the conversation, are more willing to accept whatever information and recommendations offered to them.
While we can’t make the problem completely go away, we can open the lines of communications for you.
Get in touch today because when it comes to an unwanted letter from the CRA, communication is the most important thing.