Income Tax Refund in a Consumer Proposal – Right of Set Off

Will My Income Tax Refund Be Seized By The CRA?

Especially for low to middle income households, the rights of the CRA to set off your income tax return can be a major concern.

Essentially, this is when a refund owing to the consumer in a previous income tax year is seized and applied towards a balance owing to the CRA.

Consumers often wonder whether this is technically allowed and whether they will receive future income tax returns.

When discussing your finances with your Licensed Insolvency Trustee, you can definitely raise this question as it specifically relates to your finances.

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The short answer is that, even though tax arrears are incorporated in consumer proposals, the CRA is in their rights to set off the amount owing.

Basically, this means that if you owe the CRA money and they simultaneously owe you a refund, they have the right to keep your refund and use it to pay down your tax debt.

However, they can only do so in terms of the year in which you filed the consumer proposals and for any previous years.

This means that the CRA cannot use the right to set off for any future income tax returns, so you do get those funds in-hand.

Resultantly, the next year you file for your income tax return, if the CRA owes you money, you will still have access to those funds.

For specific questions as to how the CRA amounts owing to you, discuss your options with your Licensed Insolvency Trustee.

They can outline for you the exact way a consumer proposal will impact your financial future and highlight any opportunities to get better terms.

All meetings are confidential and objective, run by trained and experienced financial professionals.

There is no risk, cost, or obligation to the meeting; so, to embrace a solid financial future, reach out today.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal

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