Boale, Wood and Company

Licensed Insolvency Trustee

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Tax problems with Canada Revenue Agency?

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Are you experiencing tax problems with Canada Revenue Agency (“CRA”)?  If you are burdened with serious debt problems, CRA may be only one of several creditors that you have to deal with.

You may see advertisements from tax lawyers trying to scare you into believing that you need their services to deal with CRA debt, however; consulting with a Licensed Trustee may be a much better option for you. CRA isn’t looking to prosecute you; they are looking to collect money and a Trustee is usually your best option for dealing with debt.

Why use a Licensed Trustee instead of a tax lawyer? A Licensed Trustee can:

  • Provide you with a full financial appraisal of your situation;
  • Deal with all of your debts while a tax lawyer only deals with your CRA debt; the rest remains;
  • Advise you on insolvency alternatives which include Division I proposal or consumer proposals , credit counseling and debt consolidation and, as a final option, bankruptcy;
  • Provide immediate protection with a Stay of Proceedings by filing a Division I Proposal, Consumer Proposal or an Assignment in Bankruptcy;
  • Advise what amounts are payable under the statute;
  • Be less expensive than using a tax lawyer because in many cases the Trustee doesn’t charge a fee over and above what the Bankruptcy and Insolvency Act requires to be paid;
  • Save you money because the actual amount required to settle using a lawyer may be higher than what debts could be settled for in a proposal or a bankruptcy;
  • Offer you a free consultation while a tax lawyer usually requires a retainer.

There are a few cases in which you may want to consult a tax lawyer:

  • Your debts chiefly or only involve CRA;
  • You are not insolvent;
  • CRA has registered liens on your property (bankruptcy does not always remove liens);
  • Communication between you and your tax lawyer is privileged; a trustee must seek and make full disclosure;
  •  You can avoid a bankruptcy filing and use the voluntary disclosure rules on all of your conduct and transactions;
  • You are being prosecuted by the Department of Justice in relation to your tax reporting and therefore do require a lawyer.

If you’re experiencing serious debt issues, including tax problems with CRA, contact Boale, Wood & Company Ltd. at (604) 605-3335 for a no cost, no obligation consultation.  Call us now to make a fresh start.

** Inspired by my friends and colleagues at Ira Smith Trustee & Receiver Inc.

Guest on CBC online chat

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Last week, the CBC asked me to take part in an online discussion about Canada’s bankruptcy process.  The online chat was sparked by a national story by reporter Kathy Tomlinson:  Bankruptcy claimant protected, despite spending spree.

As CBC Vancouver producer Lisa Johnson put it:

The format is similar to a radio call-in show, but online, so people are typing rather than calling in. All the comments are pre-moderated…and our reporter will also be part of the conversation. We would like to have an expert on the system, to answer people’s questions about how it works, and what the current issues are for your profession.

I thought it was an interesting way to deal with issues.  However, it got away from the real story and was a little bit of trustee bashing.  One participant was really digging for info about trustees.  I smelled a set up and the producer did not post all of his questions.  It turns out he has a complaint about trustees.  But all in all, I really enjoyed the way it worked.  Would do it again in a flash.

Here’s a link the story – scroll down to bottom of the story in the section called Cover It Live to replay the online chat.

Ontario Announces Plan to Regulate Debt Settlement Companies

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On January 4, 2013, the Ontario Minister of Consumer Services, Margaret Best, announced that the Ontario government plans to regulate Debt Settlement companies. A link to the news release is at the end of this article.

Debt Settlement companies claim to settle an individual’s debts for less than the full amount owing. The government is concerned with the advertising done by these companies, which in many cases is misleading for consumers. Many Debt Settlement companies charge up-front fees, even if they are not able to settle the debts.  In deciding to regulate these companies, the government is addressing a growing concern with their practices.

Most Trustees have seen people who have dealt with these companies and received less than satisfactory results.  The government noted that the Ontario Association of Credit Counseling Services receives over 100 complaints about Debt Settlement companies a month. The United States legislated against these practices several years ago after billions of dollars were scammed from consumers south of the border. We now see these kinds of players in Canada.  As noted in the press release, “Ontario is joining other provinces like Alberta, Manitoba and Nova Scotia, which have introduced regulations to crack down on Debt Settlement Companies. “

The proposed new rules are designed to:

  • prevent Debt Settlement companies from charging up-front fees;
  • limit the amount they can charge;
  • provided clear and transparent contracts;
  • introduce a 10-day cooling off period that will allow consumers to get out of the contract; and,
  • include rules to prohibit the type of misleading advertising conducted by many Debt Settlement firms.

Most Debt Settlement companies operate by collecting monthly payments from individuals over time, in many cases for up to 3 years.  Once the company has collected enough money to settle the debts, they approach the creditors with a settlement offer.  Unfortunately for most people the creditors may not wait the length of time it takes to save these funds, and may not work with these Debt Settlement companies. For the individuals using these companies, most have paid thousands of dollars but have not had their debts settled. The Debt Settlement companies kept most (if not all) of the money that was paid to them as fees. This is one of the practices that the government is trying to stop with their new rules.

One of the biggest problems with trying to settle your debts on an informal basis, either on your own or with Debt Settlement companies, is that you do not get legal protection from your creditors. You also need all your creditors to accept the informal settlement offer for it to work. Creditors must work with licensed Trustees in Bankruptcy, and know that by doing so are working with highly-trained professionals who are governed by strict regulations and a rigid code of ethics.

And unlike an informal settlement from a Debt Settlement company, with a Consumer Proposal, you get complete legal protection from your creditors.  It stops legal actions and garnishees that may have started and prevents legal actions from starting.  When a Consumer Proposal is filed, debtors and creditors must work with a licensed Trustee in Bankruptcy who is a highly trained professional, has a rigid code of ethics that must be followed, and is governed by strict federal government laws and regulations.  Best of all, you do not need all of your creditors to accept a Consumer Proposal; once the required majority has accepted it, the Proposal must be accepted by all of your creditors.

Here’s the link to government news release.

 

File Your Income Tax Return, You Might Get Money Back

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(updated April 2017)

Did you know that just by filing your income tax return, you could receive more money from the federal and provincial governments through tax credits and benefits?

By simply filing your income tax return, a single person may receive approximately $585 more per year, a single parent with one child could receive $4,700 a year, and a two-parent family with two children may receive up to $8,600 more per year.

 By filing your income tax return you could receive:

  • GST/HST Credit
  • BC Low-Income Climate Action Tax Credit

You may also be eligible for other benefits such as:

  • Canada Child Tax Benefit
  • National Child Benefit Supplement
  • Working Income Tax Benefit

Other government departments also rely on your tax assessment to determine whether you qualify for rent or medical service plan premium subsidies.  By not filing your return, they typically find it difficult to provide you that assistance.

It is not illegal to owe the government money on your tax return; however, the Income Tax Act requires that you file your return annually and on time.

 

Please see this message from David Wood, founder of Boale,Wood and Company. Read More