# I am a Prisoner of Revenue Canada



## lost and confused (Sep 15, 2011)

my story is a bit embarrassing but i will tell it anyway....i basically feel like i have been a prisoner of CRA for the past 10+ years....

i have been working as a sub contractor in a family business for the past 15+ years....i am responsible to pay my own taxes....with the economy so bad it has basically been a choice to pay my taxes or pay my household bills and mortgage....

i am not trying to blame anybody else for my problems because i know its my own fault....i make small tax payments which dont even cover the interest....

i always file my taxes on time but i always owe....currently my outstanding balance is almost 20,000....

for the past 5-10 years i basically could not even have a bank account because CRA would take my money....i have been paid cash for my work during this time (which i still claim) to avoid this....

the family business is now disolving and closing due to retirements etc etc....

this leaves me now looking for a job where i will be payed as an employee on the books and taxes deducted from my pay check....

my problem is....as soon as CRA finds out where i work they are going to take all my pay wont they?....and i also now need a bank account to deposit my pay cheques....and as soon as i open an account the CRA will put a hold on it....

im stuck between a rock and a hard place and dont know what to do....

i dont really want to go the bankruptcy route (not sure that would get rid of tax debt anyway) because i have spent the last 5+ years rebuilding my credit which is now A+++++ and i want to avoid ruining my credit if possible.....

any advice????


----------



## sags (May 15, 2010)

You have a few options.

1) If you have equity in your home...sell it or refinance and pay the debt.

2) Discuss your situation with a bankruptcy trustee. The first consultation is free. You would be presented with 2 options, and both will eliminate debt to the CRA. They are bankruptcy and a consumer proposal. Either will have a very negative impact on your credit rating for a period of time.

You said you have a AAA credit rating, which should help get a loan. If it can't there isn't much point worrying about protecting it.


----------



## kcowan (Jul 1, 2010)

You have been living beyond your rmeans for 10 years. Now you have to negotiate with your creditor (CRA) to pay up. They will accept a payment plan if you can show them that you will be paid up in a reasonable time period of living modestly.

There is no other alternative. Bankruptcy would be folly. Get professional help.


----------



## al42 (Mar 5, 2011)

I have a friend that was in the exact same position as you .
Sub contractor, never paid a dime in taxes for 5 or 6 years and owed
over 120K, had to use one of those check cashing places for over a year as his bank account was frozen by the CRA. It all came to a head when he moved a few months ago and had to sell his house. He found out that the CRA put a lean on it so he had to speak with them and negotiate a settlement.
He had to pay them his half of the profit on the house, they did not touch his wife's half , and he had to agree to a 40% wage garnish. So his employer now takes 40% of his wages and sends it to the CRA without fail every week.
He still owes a sh*t load and still has the GST department to settle with.

Good Luck!!


----------



## andrewf (Mar 1, 2010)

I'm not sure how much sympathy you should be getting. You were evading taxes. It's only fair that you have to pay your share.


----------



## lost and confused (Sep 15, 2011)

andrewf said:


> I'm not sure how much sympathy you should be getting. You were evading taxes. It's only fair that you have to pay your share.


I never asked for any sympathy, I clearly stated in my post that I know its my own fault,


----------



## Cal (Jun 17, 2009)

It does sound like you have been living beyond your means...but in your defence you haven't provided much in regards to income or specifice details about your life that may have resulted in this situation (illness, child w illness...).

I am more curious to know what you have done in your life to try to reduce household spending, or increase income outside of primary job to pay down the debt. You haven't mentioned what you have done to help your situation other than to say poor me, it is my fault. I am sure that CRA will be much more lenient when they see what you have done to help your situation.

At least you have an asset, that you might be able to use (your home) to your advantage.


----------



## MoneyGal (Apr 24, 2009)

Well, how much can he have been earning if the choice was EITHER to pay household bills OR pay taxes?

$20K of outstanding taxes seems like a pretty small number. 

CRA will work out a payment plan with you, like was posted upthread. If you make an honest attempt to repay what you owe them, they will garnish your paycheque but they will not garnish all of it. 

When you stop cooperating with them - and getting paid all in cash for a DECADE to avoid outstanding tax bills probably constitutes "not cooperating" - they get more hard-line with you. 

I'm not really sure what this post is about. Yes, CRA can and likely will garnish your paycheque once you get a job and a bank account. But ... isn't that kind of a solution to your problems?!


----------



## Dana (Nov 17, 2009)

Drawing on my previous experience as a credit counsellor, CRA is very amenable to working with taxpayers and finding payment schedules that work. CRA can garnish your wages (I believe up to 50% whereas other creditors can only apply to garnishee up to 30%). They can also put a lien on real estate that is in your name and automatically assume first position. They can also freeze your bank accounts (single and joint), however in my experience they do not do this if you are proactive in arranging a payment plan and make the payments as agreed. They will likely require you to send them post-dated cheques. 

You will save yourself a lot of stress and worry if you call them first and make an arrangement you can live with.


----------



## OptsyEagle (Nov 29, 2009)

What CRA should do is go after your employer. I would love to hear your reasoning as to why you were a sub-contractor and not an employee, subject to withholding tax. I would suspect you were indeed an employee which would make your employer obligated to pay the witholding taxes. It is very likely that CRA will eventually get around to this.

You are the reason they don't allow most people to be "sub-contractors".


----------



## Fiona12 (Sep 17, 2011)

I think you need some professional help, because you are getting any sympathy by avoiding taxes.


----------



## Samuel (Sep 21, 2011)

The situation you have landed into where is most definitely your own creation, it does beg to ask the question when is education about tax going to be made mandatory? I mean people when they start working usually just assume that they don't need to be concerned about paying taxes ( not seriously at least) and their money is nobody's right. However i for one am a pretty strong advocate of some mandatory kind of of tax training so that people realize that you can't shy away from doing that bit. 

Also if money seems to be an issue, i would suggest first making a spreadsheet that focuses on inflow of cash versus expenses like household, credit cards etc. Have a long hard look and try to eliminate any thing that's non essential ( like eating out less) . Also in case you have loans and credit cards outstanding, it would be a good idea to draw up some kind of an repayment schedule so that you don't just end up paying minimum balance (as per credit card.) 

Thing is , the more debt you have...the more it grows..so you would try to keep it to a minimum. 

Not sure how much i helped but hope you can manage your expenses well and try discuss about the settlement. Best of luck


----------



## GeniusBoy27 (Jun 11, 2010)

I agree, sell your assets, or get a lone from the bank, if you have a high credit rating and pay back CRA.

Even before credit card debt, I'd pay CRA. The hand of Government can also slap you around silly. Personally, if you have a house, get a HELOC. IF you don't have a house, get an unsecured loan from the bank, and pay off CRA. Don't let them garnish your wages, as you'll have some better fiscal control. And live cheaply until you pay off your debt.


----------



## Addy (Mar 12, 2010)

If you are prepared to remedy the outstanding taxes, pick up the phone, call CRA and be honest with them. If you are prepared to settle up this is. I was behind over 4 years taxes in my 20's. I phoned, told them I wanted to clear things up but didn't know how. They forwarded copies of everything I needed to file my returns, then they worked with me on payments I could afford. It was a very positive experience because I wanted things cleaned up. The relief after speaking with them was immeasurable.


----------



## larry81 (Nov 22, 2010)

Rule #1: dont mess with CRA


----------



## fraser (May 15, 2010)

The best advice has been provided. Contact CRA, demonstrate that you are serious about clearing off the outstanding amount, set up a payment plan and STICK to it. I would begin this journey now, prior to getting a new job.

What you do not need is CRA finding out who you new employer is and and having them contact that new employer-especially if you have a probationary period with your new employer.


----------



## KaeJS (Sep 28, 2010)

larry81 said:


> Rule #1: dont mess with CRA


What about Rule #2?

Rule #2: Pay your MF taxes, because all of us have.


----------

