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How to cope if you owe income tax – Mortgage Matters

For the self-employed, the tax filing date has not changed and taxes must be filed by June 15, 2022.

All payments for the current tax year are due by April 30, 2021, which applies to balances and payments under Part 1 of the Income Tax Act. For all others, the payment date and deposit date are April 30, 2022.

When you are self-employed and have no tax deductions from your pay and have not made other arrangements to cover your tax debt at the end of the year, you may have a problem. Tax debt is serious and should be dealt with immediately.

The Canada Revenue Agency has extensive powers when you owe them money. If you owe them, they’ll find a way to recover. They charge penalties and interest on your overdue taxes. They can withhold payment of your Child Tax Credit and GST Refund. They can take money from your bank account or garnish your wages.

If you own real estate, the CRA can register a lien on your property if what you owe them has been unpaid for a long time. This is done to ensure that you pay your outstanding debt. When a lien is registered on your property, it may prohibit you from refinancing or selling your property until the outstanding debt is fully paid.

An important issue to consider is that if you are self-employed and your income tax is not up to date, you will not be able to obtain mortgage financing to buy a home, purchase a vacation property, transfer your mortgage, or access to the equity in your property. Even our alternative and private lenders will not advance a mortgage unless any CRA back taxes are paid in full.

Canadian banks and credit unions will not provide an unsecured loan to pay tax debt, nor can they generally refinance an existing mortgage to cover the debt.

The CRA will generally not accept any arrangement other than full payment and this is due and payable at the time of your assessment or reassessment. They cannot set a precedent that would allow them to accept less from everyone. They have one of the highest collection activity rates in Canada because our taxes fund public goods and services. So what do you do if you can’t pay them in full?

Contact them immediately. You may be able to negotiate a payment schedule if you can’t pay the full amount, but they usually won’t leave it unpaid for more than a few months. Be aware that they will continue to charge interest and penalties on the overdue amount.

It is important to note that if you declare bankruptcy or file a consumer proposal, this does not release a lien on your property. If you go bankrupt on your CRA debt, the lien remains and, even worse, accrues interest over time. Even after you are discharged from bankruptcy, the lien remains in effect until you eventually sell your home.

If you’re a homeowner, having an experienced mortgage broker working for you can save you time and money when looking for a solution to your CRA issue. If you just can’t pay the full amount of your back taxes, consider refinancing your mortgage and using the equity in your home, a consolidation loan is possible, which may include tax arrears. taxes and other debts.

Mortgage brokers have access to lenders who will allow refinancing of your existing mortgage or second mortgage options to pay off outstanding CRA debt.

If you are a homeowner and are having trouble paying what is owed to the CRA this year, please call me to discuss it at 1-888-561-2679 or email me at: [email protected].

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.