The Canada Revenue Agency & How They Negotiate

The CRA & Negotiation Tactics: A Comprehensive Analysis

In the world of finance, dealing with debt can be a daunting process. This is significantly true when the debt owed is to the Canada Revenue Agency (CRA). The Canada Revenue Agency & How They Negotiate is a subject of immense importance for anyone who owes money to the CRA. This article aims to provide an in-depth analysis of this topic.

1. Negotiating with the CRA

Anyone who owes money to the CRA can directly negotiate with them to reach a mutually agreed-upon arrangement. They can do this without the need for a Licensed Insolvency Trustee. The debtor, the person who owes money, must provide the CRA with all necessary documentation and information to support the requirements of the arrangement.

Note: CRA collection agents can waive or cancel any penalties or interest accrued on the debtor’s tax debt, but they cannot reduce the original debt amount. It means that only a part of the tax bill may be excused, leaving many debtors with a significant tax debt that they cannot clear off.


2. Legal Action by CRA

In cases where the debtor fails to clear their debt, the CRA collection agent may take legal action against the debtor’s assets and income. This can include garnishing wages, seizing company inventory, or even registering a lien against a debtor’s properties. In extreme cases, the CRA may even order the Sheriff to seize and sell the debtor’s property.

3. Seeking Help from a Trustee

When debtors find themselves in such situations, many seek the help of a Trustee. The earlier you seek help, the better the outcome. In a consumer proposal, anyone who owes $250,000 or less can negotiate with their creditors with the Trustee’s help. This includes anyone who owes taxes through the operation of a sole proprietorship or a corporation.

4. The Consumer Proposal Process

Debtors can file a Consumer Proposal, forcing the CRA to participate in the negotiation process. The Trustee oversees and administers all negotiations and paperwork for the debtor. The CRA agrees to allow the debtor up to five years to repay the agreed-upon settlement amount, without charging further interest.

5. The Bankruptcy and Insolvency Act (BIA)

Under the BIA, a proposal, once approved by the court, is binding on all creditors, including the CRA. However, the CRA has unique policies regarding voting on proposals.

6. The CRA’s Voting Process

Most creditors who file paperwork in a consumer proposal process fill out standard creditor package forms and submit them to the Trustee for review. This could include a voting letter indicating if the creditor will vote “for” or “against” the settlement offer put forward in the proposal.

7. The Role of the CRA’s Insolvency Agent

Once the CRA receives the Trustee’s creditor package, a formal process is triggered, putting an immediate stop to all CRA collection agent efforts. The file is then transferred to an insolvency agent at a regional CRA office.

8. The CRA’s Due Diligence

The CRA’s due diligence involves assessing the viability of the proposal. They examine if the debtor provides a true picture of their financial affairs, if their cash flow calculations support the proposal’s terms, and if the expenses listed by the debtor in their budget are reasonable.

9. Voting at the Creditor Meeting

At the creditor meeting, the CRA will express its concerns and may request additional information or a higher settlement offer from the debtor. Voting on the proposal can take place at this meeting, and the majority wins.

10. Final Approval of the Proposal

If all parties agree, then the proposal goes to the court for final approval 15 days later. If you’re struggling with the CRA and need help negotiating with them, consider a Bankruptcy Canada Consumer Proposal. Bankruptcy Canada professionals will work with you to craft a successful Consumer Proposal and put protection in place using the power of the Bankruptcy & Insolvency Act, preventing the CRA from garnishing your wages or freezing your bank accounts.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.