# Tax mess. I have no idea what to do.



## JohnnyT (Nov 29, 2012)

Hopefully someone has some advice. My lifestyle is very tentative. I suck at math and generally keep to myself. Doing something like "taxes" is a complete nightmare for me It pretty much combines everything I suck at into one big mess of tasks. I have clinical depression and severe anxiety (although much better now) and had tons of jobs throughout my life. I never even filed taxes until I was about 28 and I think my sister did them for me (until then no one ever bothered me about them). Then I think some advocacy group did some after that for free as I was on disability at the time. I don't keep much in the way of documentation and find it utterly impossible to remember when I worked where and for how long. A job I did 2 years ago could have been 4 years ago for all I know. 

I just recieved a letter from revenue Canada stating I need to file my taxes by a certain date or they'll do them and give me penalties and yadda yadda based on the information they have. I have no idea what information they have and there's literally no chance I'll be able to provide clearer information.
What should I do? Should I just let them do it and pay up even though they're likely going to screw me royally? Is there a way I can get the information from them and do it myself or is that just going to cost the same anyway? 
I think I had one job in the last 3 years where everything was deducted from my paycheck and I was there for about 6 months. The other jobs were just various construction work where nothing was deducted. 
AT the same time I recieved this letter from Revenue Canada I also received a "statement of Contract Payments" from one of the construction companies I worked for probably 2 or 3 years ago and made about $4000 (T5018). I'm not sure why they would send this after so long. Did Revenue Canada make them send it? 

What should I do?


----------



## JohnnyT (Nov 29, 2012)

I might actually try and do them myself this time. I think I found most of the documentation in a shoe box going back to 2009. I can't believe I actually saved it. This will be the first time I've ever done this. Can I deduct the alcohol needed to get me through this? 

Any advice would still be greatly appreciated. I know absolutely nothing.


----------



## MoneyGal (Apr 24, 2009)

You have two choices: you can go with the deemed assessment from CRA, or you can find someone to help you. Your actual tax situation does not sound that complicated, although you may have difficulty getting everything sorted out by the deadline imposed by CRA. 

Find someone you trust - there must be at least ONE person - and ask them who does their taxes. Ask your sister who does her taxes, or if she'd be willing to help you. 

There are also these low-income tax clinics that provide free tax-filing help: http://www.cra-arc.gc.ca/volunteer/ 

At the bottom of this page - http://www.cra-arc.gc.ca/E/pub/tg/tis28/tis28-12e.html - there is a phone number to find out more about getting help through this channel. 

Should you just accept CRA's version of what you owe? Probably not, because they are likely to estimate high.


----------



## Guigz (Oct 28, 2010)

You can probably get all the information that CRA has on your file by doing an ATIP request (access to information privacy act allows you to get all information that is about you).

My advice to you would be to get in touch with them and ask them for advice. Maybe they can give you an idea of what your options are.


----------



## marina628 (Dec 14, 2010)

My friend was in similar situation years ago mainly working for cash jobs .also in construction industry.He made appointment with them in person and agreed to pay taxes on $16,000 a year for a few years.Because he had been working on a $50,000 a year job for 2-3 years and had taxes deducted he was not in debt much to them and they allowed him to pay it out.It is possible they found your name while auditing a former employer ,were you paid any gst as you would have to file these papers as well.


----------



## MoneyGal (Apr 24, 2009)

Guigz said:


> You can probably get all the information that CRA has on your file by doing an ATIP request (access to information privacy act allows you to get all information that is about you).
> 
> My advice to you would be to get in touch with them and ask them for advice. Maybe they can give you an idea of what your options are.


You don't need to do an ATIP request. You can just request copies of any T-slips (T4s, T5s) that have been filed with them for you.


----------



## Guigz (Oct 28, 2010)

MoneyGal said:


> You don't need to do an ATIP request. You can just request copies of any T-slips (T4s, T5s) that have been filed with them for you.


If all you want are the slips, you don't need to do an ATIP request. If you are interested in the rest of the information that they have on you, including any emails that were sent containing your information, an ATIP request is appropriate.


----------



## MoneyGal (Apr 24, 2009)

???? Yes, for sure, but why would you want these? What you need to complete your return is copies of your T-slips. I mean, I can get wanting copies of ?e-mails? sent about you, maybe, if you were appealing a CRA garnishment of your income, but *even in that case* what's usually required to correct a garnishment is simply filing the missing return(s). 

What information would you find in an e-mail, and what would you do with it? And why would you recommend this to someone who says handling his missing returns is a "complete nightmare"?


----------



## JohnnyT (Nov 29, 2012)

Thanks for all the tips. I found a bunch of crap in my shoebox and I think I have about half of what I need. I've got a few T4's. Lots of statements but I'm missing some stuff. 
I think in the last 3 years before 2012 I worked for about 3 differen't companies doing construction. I have a T4 for one of them. I worked for another company that deducted in 2009 and overlapping into 2010 and have a T4 for only 2010 I think. I also took a big loss in the stock market at some point. I'm not sure if I can find whatever the trading company sends as proof of that but I have an online account. How do you go about getting the missing information? If I ask Revenue Canada for the information I would imagine they'll send me my work stuff right? So I won't need to get that from employers. Can I just log into my trading account and get the info I need on the capitol gains loss or do I need a real T4 type thingy from them (which they probably sent and I threw out). 
I was also on EI for a while but I can't find a T4 from them.
That's what it all boils down to right? T4's?

I think I saved a bunch of reciepts from work related expenses for a few months too. Not sure if I still have them though.

Does my stock market loss get deducted from my taxable income or just from taxed capitol gains if I had any (which I don't).

What really sucks is that most of what taxes go towards I don't even use other then sidewalks. I'd rather walk on grass personally. :distress:


----------



## MoneyGal (Apr 24, 2009)

You know what? File with what you've got now. You'll meet the deadline, CRA will fill in any "missing blanks" with information they've got (so if you lost a T4, they will automatically adjust the return that you file), and you can amend the returns later if you want to / need to. 

Trading losses - in unregistered accounts - generally deductible against capital gains. You don't get an official T-anything slip for an unregistered account (you have to keep track of gains/losses on your own); or if the losses were in a registered account (RRSP) you can't deduct them anyways, so don't worry about them.


----------



## Charlie (May 20, 2011)

If you're close to a tax office, consider setting up a meeting. They're not that scary -- and at the level you're dealing with they're most likely just interested in getting you filed. Until recently I would have agreed with MG's last post on just filing and letting them fill in the blanks-- but CRA has begun assessing failure to disclose penalties which equal 25% of the income not reported if you omit a source for the second time in three or four years. I can't remember the details -- but essentially, if you miss an income source from the same place twice, you'll get hit with a penalty of 25% of the income on the second omission -- even if it had little, or no impact on taxes owing. (The one case I saw, the guy missed RRSP withdrawals from a brokerage he'd forgotten about and which had an old address. The slips would have increased his refund due to withholdings -- but they still hit him with a significant penalty). He filed three years at once, and they hit him with the penalty for the second and third year.

So at minimum do take MG's original advice and get copies of the slips they have-- or contact them and see if you can review it with them before submitting. But do get it done, contact before the deadline -- that's critical. 

And good luck.


----------



## slacker (Mar 8, 2010)

You should consider hiring someone to do this for you. Try the local H&R Block. They have ways to find any employment and pay information. Things that you may have lost, they can get it for you.

It'll cost you though. I think about $100 per year of tax return.

It's not cheap, but you don't seem able to handle this right now. Consider getting on top of this after you have paid someone else to handle this for you later.


----------



## kcowan (Jul 1, 2010)

With your brokerage account, you might have had dividend income. There are T5s that cover all that stuff. Gains or losses are handled seperately and require you to figure it out. They provide an annual Trading Summary. With online access, you can request previous years. 

H&R Block will just deal with what you give them. You still have the work to collect all the info.


----------



## stardancer (Apr 26, 2009)

When I worked at H&R Block, we would call CRA with the client beside us to get the information they had on file. The client could give verbal permission, and it also went on record that we were dealing with the situation so CRA would cut the client some slack on the timeline. This was in a small town where everyone knew each other; don't know what other offices are like. For clients who didn't understand taxes, the fees were worth it.


----------



## MoneyGal (Apr 24, 2009)

Charlie said:


> If you're close to a tax office, consider setting up a meeting. They're not that scary -- and at the level you're dealing with they're most likely just interested in getting you filed. Until recently I would have agreed with MG's last post on just filing and letting them fill in the blanks-- but CRA has begun assessing failure to disclose penalties which equal 25% of the income not reported if you omit a source for the second time in three or four years. I can't remember the details -- but essentially, if you miss an income source from the same place twice, you'll get hit with a penalty of 25% of the income on the second omission -- even if it had little, or no impact on taxes owing. (The one case I saw, the guy missed RRSP withdrawals from a brokerage he'd forgotten about and which had an old address. The slips would have increased his refund due to withholdings -- but they still hit him with a significant penalty). He filed three years at once, and they hit him with the penalty for the second and third year.


This is a great point. In the only recent case that I am familiar with, the penalties were assessed when the returns were assessed BUT then the penalties were all reversed shortly thereafter. I don't know the rationale for the penalties or the reversal.


----------



## Guigz (Oct 28, 2010)

MoneyGal said:


> ???? Yes, for sure, but why would you want these? What you need to complete your return is copies of your T-slips. I mean, I can get wanting copies of ?e-mails? sent about you, maybe, if you were appealing a CRA garnishment of your income, but *even in that case* what's usually required to correct a garnishment is simply filing the missing return(s).
> 
> What information would you find in an e-mail, and what would you do with it? And why would you recommend this to someone who says handling his missing returns is a "complete nightmare"?


I won't waste time answering questions that are sure to lead to more questions yet. I will simply say that I wanted to highlight the fact that it was an option that would yield more information than simply asking for the T-slips. 

But what do I know, I only have 260 posts? each:


----------



## Just a Guy (Mar 27, 2012)

Well, first off, I'd call and ask them for all the information they have. They'll send you everything. If you fail to claim certain things that they have and you don't, there are fines for that.

Second, I'd call them and talk to them about an extension, they'll generally give it if you talk to them.

Third, I'd hire an accountant or someone to file the back taxes.


----------



## underemployedactor (Oct 22, 2011)

+1 on hiring an accountant. S/he can buy you some time while you sort out your documentation. Sounds like you probably have some self employed income too if you are doing casual construction work. Were you issued some T4A's as well. Find an accountant who understands the field you are in. Ask some of your co worders who they use. And yeah, the alcohol you will need to get you through this may be tax decuctible on self employed income if you hide it under a "professional gifts" category.:biggrin: Just be careful you don't mix your meds.


----------



## 44545 (Feb 14, 2012)

When I was young and foolish/undiciplined/(pick your own adjective) I neglected to file for a couple of years. I'll tell you what I did to get back on track.

First, keep this in mind to help with the stress: anything you do is likely going to make things better. You can always fall back on hiring someone to help but why not start the process yourself and save a few bucks?

Collect as much information as you can and create a simple filing system to store it. An accordion file labeled by tax year should be enough, if your returns are simple. Ditch the shoebox.

Break things down by tax year. Instead of one big intimidating project, each tax year is a mini project.

Also remember if you file a return and make a mistake, you can send CRA data and ask them to revise a previous tax year.

Figure out what you're missing and go track it down. Ask friends and family if they remember the names of places you've worked. Call those companies and ask for copies of your T4s (or whatever T-form they issued; you mentioned a T5018)

Call CRA and discuss with them, see what they've got on file.

If your income is low enough, some of the online tax software (U-File?) is free to use. Try it. You can save all your data and come back to it. I tried H&R Block once but wasn't overly impressed - they're just keying data into something like U-File so you may as well do it yourself.


----------



## Eclectic12 (Oct 20, 2010)

JohnnyT said:


> Thanks for all the tips. I found a bunch of crap in my shoebox and I think I have about half of what I need. I've got a few T4's. Lots of statements but I'm missing some stuff.
> 
> ...I'm not sure if I can find whatever the trading company sends as proof of that but I have an online account. How do you go about getting the missing information? If I ask Revenue Canada for the information I would imagine they'll send me my work stuff right? So I won't need to get that from employers. Can I just log into my trading account and get the info I need on the capitol gains loss or do I need a real T4 type thingy from them (which they probably sent and I threw out)...
> 
> Does my stock market loss get deducted from my taxable income or just from taxed capitol gains if I had any (which I don't)...


If you have some of the slips & math is the major issue - maybe the tax software is a possible solution? I know I've found it a lot easier where the software does the math. It makes taxes more like a matching game (ex. go to T4 entry form, enter box 14 number, enter box 22 number ...).

Here are some options:
http://en.wikipedia.org/wiki/Canadian_tax_preparation_software_for_personal_use


You can always decide to take it to someone else (volunteer or paid) after giving it a try.


Yes, you can ask CRA to send you what they have, which in my case, include the investment T5 Make sure their address on file is correct as when I had a flood destroy some papers, CRA mailed the info to my old address and slowed down the process. 


Stock market losses become a Capital Loss and can only be used to reduce any Capital Gains, going back three years from when the CL happened or carried forward indefinitely. So worse case, you might not be able to use them today but you won't lose them. 


Cheers


----------



## Rusty O'Toole (Feb 1, 2012)

I too am math challenged and suffer from depression.The first thing you need to do is get organized, as repulsive and time wasting as it seems.

Suggest you get a small filing cabinet, legal size, and a clip board. If you don't feel like investing in a 2 drawer filing cabinet, at least get some kind of file even a cardboard box that will hold some file folders. You can get a clipboard at the dollar store for a $1 buck.

Now sort out all your receipts into fastidious little piles. Put the piles in individual file folders. Tip: if you don't know what categories to use, copy them off your income tax form. This will make things easier at tax time. If you have any left over that you don't know where they go, stick them all in one file. Don't forget to keep your bills for medical expenses like drugs (the legal kind).

Good news: you can't do this wrong. You are allowed to keep your records any way you please. If you mess up a little your tax guy or gal can sort it out, at least you will make their job a little easier.

Second good news: It sounds like you don't make very much money. If you make less than about $35000 a year, chances are you don't have to pay any taxes. Less than $25000 it's a cinch. If you don't owe any taxes, you don't have to file and there is no penalty for not filing.

Third good news: Chances are you will have a refund coming on the taxes you already paid, plus there are other goodies like HST credit that could get you some checks for $400 a year or more.

Now all you need to do is find someone who will help you fill out the tax forms.

O yes about the clipboard. Keep it handy when you open the mail and clip all the bills on it. Twice a month, on the 1st and the 15th sit down at your computer and pay all the bills. Mark each one paid and put them in your filing cabinet. This is a slight nuisance, and you may not always get it done on the date you are supposed to, but if you keep at it soon your bills will be in good shape.

I find I can pay all my bills this way in 10 minutes twice a month. Faster if I set down my coffee and type with both hands.

Hope this helps. If it makes you feel any better I just went thru the same thing, sorting out a pile of paper work that has accumulated on my desk. I realized I left it a little too long when I hit a couple of newspapers from 1976.

Ha ha no kidding, the bottom drawer on my desk was not closing completely. So I took the drawer out and behind it, found some old envelopes and 2 1976 newspapers. I got the desk second hand about 10 years ago so they must have been there since I got it.

The main thing is I got everything sorted out, and before the end of the year this time. Usually I get around to it at the last minute, and miss the filing deadline. The point is, you get better as you go along. Have a go, it's easier than you think and you really can't mess up any worse than you already have. If you get some help and get everything up to date, and get a little organized, after that it gets easier and easier the longer you keep at it.


----------



## MoneyGal (Apr 24, 2009)

If CRA has requested you file, you must file and you can and will be penalized financially for not filing until you file.


----------



## TaxGuy (Apr 7, 2009)

You do need to file as soon as possible because, as MoneyGal said, you can be penalized for ignoring them. I had a client had the CRA asses her and then fine and apply penalties. The rate of penalties was morethan 40%!

Call the CRA and tell them you are working on getting it together and then ask for the tax slips they have on file for that (and any later tax year ... you should do all the years together). Gather any brokerage statements (non-RRSP and non-TFSA) and see if you have any trades. Then either do them yourself using tax software or hire a preparer to help you.


----------



## JohnnyT (Nov 29, 2012)

Here's a follow up. It ain't pretty. The problem went away for a while because I didn't receive the assessments. I finally got everything and they say I owe them around 12 grand. I don't know where they get their numbers from but I supposed it's possible. One thing they probably don't know is that I probably have a few thousand in capitol gains losses from the stock market but I can't imagine that will help me too much. 

So now I'm trying to research my options and it seems like bankruptcy makes the most sense as I'm currently not working, I have no real assets and I really don't want any credit in the near future because it's nothing but a hassle. I have no credit history as it is and couldn't get a credit card and I keep reading about how people who have gone bankrupt can "restore" their credit and get a credit card after a year. Meanwhile I'm NOT bankrupt and have no credit history and I CAN'T get a credit card now (not that I'd want one). 

I really don't lead the kind of life that requires good credit or "assets" and I would like to just work, get paid, and live! I suppose the 12 grand comes from working for employers that didn't take taxes out of my paycheck. The thing is that I didn't work steady so I really couldn't have sent the government anything even if I had tried. 

So if I declared bankruptcy there's really not going to be any change in my life that I can conceive of. It's either that or start calling the government and trying to talk to them which is probably no different (or worse) then trying to reason with Rogers or Bell so why even put myself through that? I can't pay it off and the interest just keeps growing. If I start trying to pay it I'm sure I'll just be looking at years of missing payments and having my bank account frozen until I call them every other week etc and any money I pay will just be a waste since I'll end up declaring bankruptcy later on. I might as well just do it now and save myself the aggravation.


----------



## JohnnyT (Nov 29, 2012)

I do have a couple of questions about bankruptcy now that I think of it. What happens if I owe money for something that I forgot about and they get a hold of me 3 months after I filed for bankruptcy? Do I have to list these things initially or else it doesn't fall under the protective blanket of bankruptcy? Also, what happens if my great grandfather dies and leaves me $12,000 in his will? Does that automatically go to my $12,000 debt? If so for how long after? And if I do end up paying back the CRA debt after I've filed bankruptcy do I get to undo the bankruptcy?


----------



## Greenback (Mar 16, 2013)

We're going through this at the moment too.
But we are giving our stuff to an accountant to sort out, our situation is too complicated.
I recommend you do the same just for the peace of mind. They can find stuff you never will.
Our first brush with CRA many years ago was handled by a great accountant who found us a loss carry-back that amounted to a return of over $3000!
I absolutely detest sorting receipts but it has to be done, there's no way around it.
Just think about how great it will feel when you put all of this behind you.


----------



## Cal (Jun 17, 2009)

Where are you located Johnny T?

http://www.bankruptcy-ontario.org/


----------



## fraser (May 15, 2010)

You have two choices.

Start doing what Rusty recommends. It may seem daunting, but start by doing one year's return at a time. It will get easier. If you are proactive and move forward chances are you may even get a refund. At worst, you will probably reduce your tax liability and get some peace of mind. CRA will be patient IF they know that you are sincere and moving forward to file properly.

Or, you can continue worrying and crying about it, being reactive instead of proactive, loosing control, and have things go from bad to worse. 

It is really your choice. One thing for certain...it will only get worse the longer you do nothing.


----------



## marina628 (Dec 14, 2010)

$12000 imo is not enough debt to declare bankruptcy over. Make the calls you have to make ,do a credit proposal if you have other debts ,CRA will allow you to make payments especially if you are out of work right now. My friend owed $9000 on a debt and credit card company settled for $2000 .Also you will probably feel better about yourself in a few years knowing you took care of your obligations. If you said you owed $40,000 I would say bankruptcy way to go.


----------



## JohnnyT (Nov 29, 2012)

Thanks for the bankruptcy-Ontario link. 
Who do I go to about a credit proposal? Same people as a bankruptcy?
It might be an option but what I'm mainly concerned about is the stress after I take one of these routes. I had a friend who had to declare bankruptcy and his life was a nightmare for years after. Every time he went to a bank machine he had no idea if his account would be frozen or not. He actually made a lot of money and I think some of his problems were with taxes after the bankruptcy but I don't really know the details.
If I do a credit proposal and tell them I'll pay a 3rd of it am I going to be there little b*tch for the next 2 years with CRA taking money whenever they feel like it? Or maybe I get a really good job for a month and make $4000 and they swoop in and take it all out of my account rather then just wait for the monthly payments. Or perhaps take it and then say now they want $9000 since I'm doing so well even though they already agreed to $4000 when I didn't have a job?

If I have no assets at the moment and no desire to receive credit in the future then what's the difference between a credit proposal and a bankruptcy? One stays on the credit report longer but that only matters if you need good credit for something. A credit proposal just means I'm going to be stressed out for the next 2 years trying to make payments on something. The only upside I can think of with a credit proposal would be if I didn't have to worry about how much I made over any limit while I was paying off the debt. With a bankruptcy I think for the next 9 months you have to fork over 50% of any money you make over a certain limit.

Does anyone know if either bankruptcy or a credit proposal are reversible? Meaning I can pay off the full debt if I come into some money and the whole thing will be wiped off my record.


----------



## marina628 (Dec 14, 2010)

Bankruptcy is a serious thing as I am sure you know.My housekeeper went bankrupt about 20 or so years ago for a small amount of money and 6 years ago she went bankrupt again for $22,000, they would not discharge her for 2 years and she had to make payments each month.Usually you have to show all income for 12 months so as soon as you get a job they will take any excess towards your debt.Neither is reversible once you start the process and if you get inheritance during the process you have to disclose it.CRA will not take less than what you owe , I was referring to fact other debts will take reduction but CRA will make payment arrangements with you until the arrears are paid in full.As for the questions above ,if you forgot some bills in the bankruptcy filing chances are you are out of luck and will have to deal with these.If grandpa already died and there is $12000 due to you ,don't do something stupid and have a relative hold it for you to avoid paying bills,That is a criminal offense


----------



## MoneyGal (Apr 24, 2009)

You can't bankrupt your way out of unpaid taxes, so if your only debt is tax debt, don't declare bankruptcy. 

It sounds as though you are dealing with deemed taxes because you still haven't filed. 

The very first thing to do is file the outstanding tax returns. You may not owe what CRA says you owe (based on the deemed assessment) AND they will come after you in any way they want, including the seizure and sale of personal assets, until your debt to them is repaid.


----------



## Four Pillars (Apr 5, 2009)

Do what MoneyGal says. It doesn't matter if you don't like doing taxes, you have to do them anyway. That's your answer.


----------



## JohnnyT (Nov 29, 2012)

What do you mean when you say "You can't bankrupt your way out of unpaid taxes"? I've been researching this for a few days now and if you're insinuating that you can't declare bankruptcy on a tax debt then I'd have to say you're wrong. There is a limit of something like $200,000 but other then that it seems like Tax debt is a quit popular reason for bankruptcy filings in Canada.

I also know someone who did it for the exact same reason. The difference is that he had a leased vehicle and a full time steady job and an apartment and a dog etc. He owed a lot more then me. The government really gives you no choice because the interest just keeps growing and growing and if you make a deal to pay back what you can without the interest growing that goes on your credit history and it's almost as bad as bankruptcy so what's the sense?


Also my question about whether or not a bankruptcy can be undone was based on the idea that I could get the money to possibly pay all my debts in full at some point in the next 4 years and if I did do that could I have the bankruptcy reversed.
Before someone answers that one keep in mind that I did read somewhere in my research that "a bankruptcy can only be overturned by a court". They did not give the reasons under which that might happen though. But it is possibly that a bankruptcy could be overturned apparently. I am not in any way asking if a bankruptcy can be overturned without the person paying back the debts in full and probably with interest.
It does seem likely that it can't be overturned because the system is never set up for that kind of thing and they don't care what happens after they've pushed you over the edge but you never know. Perhaps legally they're not allowed to refuse someones payment on a debt and clear their credit damage.

With my situation I'm really only worried about the fact that I can't pay the debt right now and likely won't be able to pay anything for a while because of the circumstances I'm in now. So if I don't do something I will get my bank account frozen and the interest will keep getting higher and higher. Someday soon I'm sure I will be able to make payments and perhaps even pay the full $12 thousand but I think we all know there is no way to tell the government I'll start paying it later because of the situation I'm in now.


----------



## MoneyGal (Apr 24, 2009)

OK, let me put this another way: in order to proceed with a bankruptcy, you will be required to file a "pre-bankruptcy" return and a bankruptcy return. 

http://www.cra-arc.gc.ca/tx/ndvdls/bnkrptcy/menu-eng.html?=slnk

If someone goes bankrupt, a trustee takes over their assets and makes arrangements with creditors. Having unpaid taxes does not prevent you from filing for bankruptcy and ultimately CRA is just another unsecured creditor. However, CRA rarely accepts less than the nominal value of your unpaid taxes and that's what you would discover if you approached bankruptcy with unpaid taxes.


----------



## JohnnyT (Nov 29, 2012)

"CRA rarely accepts less than the nominal value of your unpaid taxes"

Are you saying that CRA dictates how long you remain bankrupt or how much of the unpaid taxes you have to pay back after you've filed for bankruptcy? I thought that was the reason people went bankrupt, because they can no longer function based on what their creditors are willing to accept. If you're correct and people "rarely" get out of paying the nominal value of the taxes then you would be quite right and bankruptcy does not do a whole lot to save you from tax debt (or any debt if CRA is just another unsecured creditor). 

In fact based on what you've said it sounds like bankruptcy actually costs more then a consumer proposal. You can even get the penalties and interest removed with something as simple as a taxpayer relief application if you have some sort of hardship or medical issue and that's basically all you're saying you'll get by filing for bankruptcy. If you're correct then why would any creditor care about anyone going bankrupt or bother trying to come to an arrangement to settle for 40% of the debt in monthly installments when they can just force the debtor into bankruptcy and basically own the person and take the nominal value (or as much as they deem acceptable) at their leisure.

Also, I'm dealing with taxes I owe now that the government has assessed them and sent me notice that I owe $12,000 and interest is growing with every passing day. I am not employed at the moment and I have absolutely no assets that would be seized or sold should I declare bankruptcy. 
My main concern is that I can't see any way I can make payments on the debt now or in the immediate future so I'll just end up with more interest and a frozen bank account over the next few months.


----------



## MoneyGal (Apr 24, 2009)

1. CRA is *not* an ordinary creditor; they have extraordinary powers far beyond other unsecured creditors. 

2. You are focusing on the wrong things. If you declare bankruptcy, you will be required to file your outstanding tax returns. And, in fact, you will be required to get your financial paperwork in order at a level that will likely make filing outstanding returns seem trivial. 

Good luck, whatever you decide to do.


----------



## JohnnyT (Nov 29, 2012)

What power does CRA have that results in them nearly always getting the nominal value of peoples' unpaid taxes after a person has filed for bankruptcy? I'm not trying to beat a dead horse here but obviously it's extremely important information for me and anyone else that may be drowning in a massive tax debt. With everything I've read there has been no indication that CRA gets any special treatment or that a person will end up having to pay off their tax debt anyway. As far as I can tell your debt gets completely wiped out whether it be tax or anything else. Other then that the only caveat is that you have to surrender your assets if they are over a certain value (I have none) and in some cases fight to keep things you need to survive and for a while you have to fork over 50% of any income deemed to be more then you need (I'm not employed) which is then dispersed to your creditors.

Perhaps CRA may have certain advantage over other creditors when it comes to dividing up a persons assets but that doesn't really affect the debtor. Other then that I can't imagine what the CRA can do over and above anyone else to ensure that they get their money regardless.

From what I've read you have to file outstanding returns up to the day you declare bankruptcy (or something like that). As far as I can tell this is so everyone is clear on how much tax you owe and what exactly is being wiped out. It wouldn't be of much help if you went bankrupt because you owe $12,000 for 2010, 2011, and 2012 when in reality you also owe $4000 for 2013 so far.

I'm not considering bankruptcy in order to get out of filing. As I've already stated I was given notice that I needed to file outstanding tax returns or they would be assessed for me by CRA. I came to this forum originally to ask if it was alright to just wait and let them assess my taxes and see what they say. They were assessed for me to the tune of $12,000 which is why I brought this thread back from the dead with an update on the situation. 
This is basically from working as a subcontractor with no deductions and then not paying tax. I couldn't really afford to pay it. I didn't work steadily and I think this also incorporates a period of about 6 months where I had a real job that deducted all that stuff from the check so I'm not sure I really trust their assessment. 

I need to find out if their assessment is accurate and if possible appeal. For all I know they may completely screw you when assessing your taxes on purpose. Maybe I actually only owe $3000. If it is true that I owe $12,000 then I've got a problem as I have no job. If declaring bankruptcy does nothing but reduce the debt slightly then that's important information.


----------



## MoneyGal (Apr 24, 2009)

How do you think you would find out if their deemed assessment is correct?


----------



## Sampson (Apr 3, 2009)

I think declaring bankruptcy to avoid doing your taxes is a little extreme. From your posts, it isn't even clear you owe taxes, only that the CRA wants you to file returns.

It would be much easier to hand over your shoe box, details of your former employers etc to a professional accountant and simply pay for them to get your returns completed. There will be some work getting copies of slips, but this is just leg work.

Seriously, you want to declare bankruptcy to avoid doing taxes?


----------



## JohnnyT (Nov 29, 2012)

MoneyGal said:


> How do you think you would find out if their deemed assessment is correct?


Once again. I am NOT considering bankruptcy to avoid filing taxes. I have made that abundantly clear over and over since I revived this thread including in my very last post where I said


JohnnyT said:


> I'm not considering bankruptcy in order to get out of filing.


 and then went on to explain that I'm considering it as an option in the event that I actually do owe $12,000 once I've assessed them myself or with an accountant. I just received the assessment a couple days ago and now I have to figure out how accurate it is

There is absolutely no issue regarding the actual filing of taxes as I am and have always been aware that I would eventually have to do them myself regardless of whether I declare bankruptcy, pay them, or file a consumer proposal (unless the assessment came back and said I owed under $1000 which I thought was a possibility). The issue is regarding your assertion that the CRA has special power and wields the ability to decide how much repayment they will accept once you've declared bankruptcy which rarely results in anyone getting out of their nominal tax debt thereby making bankruptcy pointless as far as tax debts to the CRA are concerned.



MoneyGal said:


> You can't bankrupt your way out of unpaid taxes, so if your only debt is tax debt, don't declare bankruptcy.
> .





MoneyGal said:


> Having unpaid taxes does not prevent you from filing for bankruptcy and ultimately CRA is just another unsecured creditor. However, CRA rarely accepts less than the nominal value of your unpaid taxes and that's what you would discover if you approached bankruptcy with unpaid taxes.





MoneyGal said:


> 1. CRA is *not* an ordinary creditor; they have extraordinary powers far beyond other unsecured creditors. .


----------



## Four Pillars (Apr 5, 2009)

And you are not reading the great responses that people are spending their time to try to help you.

The $12k is a theoretical number. You know you need to get your returns filed etc eventually. Do that first (and feel free to ask for suggestions on how to get that done).

Once your finances and returns are sorted, you should know where you stand as far as debts are concerned and THEN you can worry about how to deal with those debts, whether it is $12k or some other number.

The only thing you need to worry about right now is getting off your *** and getting the tax returns done. That's it. Don't waste everyone's time (including your own) with the bankruptcy questions.


----------



## JohnnyT (Nov 29, 2012)

Four Pillars said:


> And you are not reading the great responses that people are spending their time to try to help you.
> 
> The $12k is a theoretical number. You know you need to get your returns filed etc eventually. Do that first (and feel free to ask for suggestions on how to get that done).
> 
> ...


 By the responses I'm getting from both you and moneygal it's quite clear that neither of you are even reading my replies or making any attempt to answer the questions I'm actually asking. You seem to have read the first post in the thread (from months ago) and skipped to the end assuming that nothing has changed and instead of rectifying that and answering current questions you're just doubling down on what you've already said. The actual response you just gave is the first f'ing indication I've gotten that YOU actually know what the conversation is even about so thanks. Unfortunately it's something I actually already said myself a few posts back. 

The only actual piece of information I've gotten relevant to what I'm actually asking from either of you is that you can't get rid of a CRA debt by declaring bankruptcy, which I'm fairly certain is completely incorrect. 


Yes, I've gotten good advice for someone who's asking whatever questions you're answering. That person is not me however.


----------



## fraser (May 15, 2010)

Why on earth would you consider bankruptcy if you do not even know what your true CRA tax liability is? For all you know, CRA could owe you money once you have actually filed and been re-assessed.

Going thru bankruptcy will not make your problems go away.

You need to pull your head out of the sand and deal with this. I really have little sympathy for you. 

You know what has to be done so why not just get on with it and move forward. Moaning will not help.


----------



## JohnnyT (Nov 29, 2012)

fraser said:


> Why on earth would you consider bankruptcy if you do not even know what your true CRA tax liability is? For all you know, CRA could owe you money once you have actually filed and been re-assessed.
> 
> Going thru bankruptcy will not make your problems go away.
> 
> ...


Thank you! I'm not looking for sympathy I'm looking for relevant information as I know very little about this stuff. I'm not trying to make the responsibility of filing taxes go away. Although you wouldn't know that from reading the pointless replies thus far. I'm trying to deal with the actual debt and assessment issue and figure out what needs to be done now and in the event the 12k is realistic. If it's possible that the CRA is off by thousands of dollars then that is very relevant information so thanks! 
I came realize that over the last 2 days myself no thanks to this discussion.

If you're saying that bankruptcy will not make my problems go away because you mistakenly think that my motive in doing it is to avoid filing taxes then you're wrong. My motive in doing it would be because I do not have $12,000 or a steady income to make payments on $12,000 and the interest is just going to compound the problem. So the relevant first step is to find out if that figure is accurate and then go from there. This conversation just can't seem to move beyond "you can't get out of filing taxes and you can't get out of paying them with bankruptcy".


----------



## Four Pillars (Apr 5, 2009)

I've read every post on this thread.

You seem to think that you are owed an answer to every question you ask. Not so - MG and others are trying to help and point you in the direction you need to go. Whether or not you choose to follow that advice is up to you.


----------



## JohnnyT (Nov 29, 2012)

Four Pillars said:


> I've read every post on this thread.
> 
> You seem to think that you are owed an answer to every question you ask. Not so - MG and others are trying to help and point you in the direction you need to go. Whether or not you choose to follow that advice is up to you.


Ya, please don't try and now join everyone together and circle the wagons as if I'm complaining about everyone in the thread and you're all just trying to help. There have been helpful intermittent posts from "others". You are not one so just drop it. And I'm sure you did read every post on this thread after I finally pointed out that you're not even addressing anything I'm talking about but instead acting as a cheerleader for someone else who wasn't reading either.

If you want to say something useful to my CURRENT problem then by all means post in the new thread based on what I've actually said. Otherwise don't!


----------



## MoneyGal (Apr 24, 2009)

Wow, you really are kind of a jerk, eh? 

Anyways, you don't seem to understand very much about CRA, tax filing, or bankruptcy. To elaborate on your questions about the process of declaring bankruptcy while you have unpaid taxes, here is some more information that is both useful and relevant:

1. NO other creditor in Canada has the powers that CRA has. CRA can seize and sell your assets, garnish your wages, and ask your family to repay your debts. 

2. The process of declaring bankruptcy is more complicated than you assume. It isn't as straightforward as you apply and are declared bankrupt - instead, you must work with a trustee who will present your proposal to the Office of the Superintendent of Bankruptcy who either will or will not accept your proposal. For a young person, who is able to work, and who has no other debt (or little other debt) other than unpaid income taxes, the OSB will not accept a proposal for bankruptcy. 

3. CRA is empowered to accept less than the full value of outstanding taxes (WHICH IS NOT WHAT YOU EVEN HAVE IN FRONT OF YOU. You have a DEEMED ASSESSMENT which, in the absence of you filing returns, represents the amount you owe). However, for the same reasons as outlined in (2) above, CRA is extremely extremely extremely unlikely to accept the full nominal value of your outstanding taxes. WHATEVER AMOUNT THAT MIGHT BE.

You keep asking what you should do and whether some contingency that you apparently do not understand very well will apply in your case if you take some action that you might, or might not, take in the future. 

Here's what you should do: FILE YOUR TAXES. 

COMMUNICATE WITH REVENUE CANADA to start the process of restoring your file with them. 

REQUEST THAT THE INTEREST CLOCK BE STOPPED. They will do that, you know, if you (1) request it and (2) make a good-faith effort to start making good on your debt by establishing a payment schedule. 

Or you could throw up your hands some more, maybe start a new thread.


----------



## marina628 (Dec 14, 2010)

Johnny
If I am reading all your posts here ,CRA calculated your taxes for you and you have not filed anything.They probably have records of income from the companies who paid you.You should make some attempt to gather expenses which will cut your tax bill ,maybe past bank accounts which showed fuel purchases , tool etc.
I am not sure about bankruptcy laws and changes but I know in past I had a tenant who declared bankruptcy because she owed $$,$$$ in unpaid taxes .She was discharged after a year and they made her file by installment after that time.Every one has been trying to help you but if we are not helping maybe you should seek advise from somebody else.


----------



## marina628 (Dec 14, 2010)

My tenant owed over $60,000 in income taxes and other debts ,I believe on big amounts they realize sometimes Bankruptcy is necessary.$12,000 is not much money to repay , a minimum wage job would get that paid off.


----------



## lonewolf (Jun 12, 2012)

THIS THREAD I THINK ENDED

JohnnyT started another thread because this thread got to far off topic & he wanted to get more to the point of his questions. (from my understanding)


----------

