Many people who seek the assistance of a licensed insolvency trustee have substantial unpaid taxes that they owe to the Canada Revenue Agency (CRA) and they wonder can bankruptcy eliminate tax debt or if the CRA will accept a deal for taxes owed debt.
Fortunately, the answer is yes and it is possible to negotiate a payment settlement with the CRA about taxes you owe and eliminate tax debt through bankruptcy.
Negotiating With Revenue Canada (CRA)
The first step you should take when dealing with Canada Revenue Agency debt is to contact your nearest CRA office. You will have to explain your financial situation and why you cannot pay your taxes as owed. When negotiating with CRA you can offer to pay the taxes you owe in installment payments over a period of time. If you owe $1,000 in taxes that you are unable to repay you can offer to pay $100 a month for 10 months, plus any interest charges or penalties the CRA might impose.
Of course, whether the CRA will accept your offer is up to them, and they might not accept your offer and take additional action against you for collecting on the taxes owed to them.
Even if your offer is accepted, the CRA will continue to charge you interest until your taxes are paid in full, and the CRA might withhold your child tax credits or GST credits until you have repaid your tax debt fully.
Can Bankruptcy Eliminate Tax Debt? What if I Cannot Reach an Agreement With CRA?