When you are not paying your taxes on time and ignoring the notice letters from the CRA, you may find that your assets are seized for non-payment of overdue taxes. The first asset that will be affected is your bank account. The simplest reason for a CRA frozen bank account is to grab your attention. The CRA frozen bank account is not because of the amount of the tax dues that you owe the Revenue Agency but it is mainly because you have been ignoring the demand to pay notices that have been sent to you. It also happens when you have not filed your taxes for more than one year in the past and when the CRA feels that you have not been cooperating with them.
How do you deal with a CRA frozen bank account?
It would be in your best interest to seek help from professional tax consultants and deal with a CRA frozen bank account as fast as you can. Once your bank account has been frozen and you still continue to ignore the demands of the CRA, it is likely that other assets may also be seized. You may even find a lien on your house or a wage garnishment notice can be issued against you to your employer.
Your tax consultants could guide you on how to go about handling a CRA frozen bank account. There are several ways you can adopt to tackle such an event. You could open a new bank account as a backup arrangement so that your creditors would not make an attempt to seize your account there. If the CRA does not have the knowledge about your other bank accounts, it will not notify those bankers.
Another direct method is to contact the CRA collector and try to establish the reason behind the CRA frozen bank account. If the issue concerns missed tax returns, then the CRA will most likely agree to release the funds in your bank account when you consent to file the concerned tax returns within a stipulated period of time. It could be arranged as an understanding between the CRA and you.
After a CRA frozen bank account, it is important for you to come to terms with your tax consultants and work out the amount of tax dues that you are in a position to pay or can afford to pay. CRA may consider a payment schedule once you have exhausted all possible options for raising the money to pay the tax dues including selling off your assets or borrowing. CRA usually will allow a commitment to pay all the tax arrears within a period of twelve months. A time period that involves more than a year to settle all your tax arrears may not easily be accepted by the CRA so it is best to have a tax consultant negotiate on your behalf.