If you are facing a tax audit or have a huge tax debt to settle with the CRA, you need professional help to work out a tax payment plan with CRA. Some people run into financial difficulties and do not put aside sufficient money to pay the year end taxes. They should be proactive and keep themselves ready to negotiate a tax payment plan with CRA.
In a situation where you are not able to set aside the money that you need to pay your tax bills, you have to remain calm and take help to work out a tax payment plan with CRA. You can do nothing at first but wait for the notice of assessment to arrive from the CRA in your mail.
You may then seek professional help to get in touch with the collection department and suggest a tax payment plan with CRA. The professional tax consultants then aim to build up a relationship with the collection agent of the CRA while handling the process of your tax audit.
You have to be honest enough with your tax consultant and apprise him or her of your actual tax situation. You cannot promise more than what you can muster. Once you work out a tax payment plan with CRA, you have to stick by it. If you default with that plan, immediate action can be taken against you by the CRA and they can freeze your bank accounts. The idea is to be truthful in working out a tax payment plan with CRA.
When you are trying to negotiate individual or corporate taxes, it is better to come up with a tax payment plan with CRA that gets them their tax dues within a period of six months. When this is the case, you will find that the CRA collection agencies would be quite patient with you.
If you are a director of a corporation and even if you are not active in that corporation, you could be held liable for the HST trust money and the payroll taxes. You could face serious penalties if you are failing in your job as a director while not making sure that the tax money is being remitted properly. It is always safer to consult professionals so that there is a tax payment plan with CRA.
When working out a tax payment plan with CRA, you have to be sure of the installments that you fix. These installments are those periodic tax payments that you have to settle to the CRA on fixed dates to cover your tax dues that you would have otherwise paid as a lump sum amount on 30th April of the following year. Installments are never paid as an advance. They are settled throughout a calendar year in which you have earned your taxable income.
When working out a tax payment plan with CRA, you have the choice of three installment options. The first is a no-calculation option which may suit you if your income and deductions stay constant every year. The second is the `prior year’ option which may suit you if your current year’s income is similar to that of the previous year. The third is the `current year’ option which may suit you if your income and deductions are considerably different from the previous couple of years.