Debt Relief Experts
Reduce Your CRA Debt with a Consumer Proposal
If you’re struggling with CRA debt, you can reduce what you owe to the Canada Revenue Agency by filing a consumer proposal through a Licensed Insolvency Trustee (LIT). A consumer proposal allows you to negotiate with all your creditors, including the CRA, and settle your debt for less than the full amount owed.
Why Choose a Consumer Proposal for CRA Debt?
- Legally Binding: Once accepted, CRA and all creditors must adhere to the terms.
- Stop Collection Actions: Filing a proposal halts CRA collection actions including wage garnishments, bank freezes, and collection calls.
- Reduce Your Debt: You can settle your tax debt for less than you owe with a consumer proposal.
- Keep Your Assets: Unlike bankruptcy, a proposal allows you to keep your home, car, and other assets.
In a consumer proposal taxes are considered an unsecured debt as long as the CRA has not issued a tax lien against your property. Tax debts, along with other debts like credit card debt, can be reduced by filing a proposal to your creditors.
Why Will CRA Only Deal Through a Consumer Proposal?
The Canada Revenue Agency will not settle tax debt for less than the full amount owed except through a consumer proposal or bankruptcy. Tax law prohibits CRA from informally forgiving tax obligations other than penalties and interest. A proposal allows you to reduce or eliminate penalties, interest and assessed taxes owing including income tax, GST/HST and source deductions.
CRA’s Requirements for Accepting a Consumer Proposal
To have your consumer proposal accepted by CRA:
- Tax Returns Must Be Up to Date: All past tax returns must be filed before submitting your proposal. This will help CRA confirm the tax amount owing.
- Stay Current During the Proposal: CRA may ask for a clause that you agree to file all new tax returns on time and pay any new taxes owed.
- Apply Past Tax Refunds to Your Debt: Any refunds from reassessed past tax returns will go towards your outstanding CRA debt.
- Fair Offer: CRA and your other creditors vote to approve the proposal. Your offer must be both affordable to you and fair to your creditors.
Can CRA Reject My Consumer Proposal?
CRA may reject a proposal if:
- You haven’t filed all your tax returns.
- The offer is too low compared to what they’d receive in a bankruptcy.
- They believe the proposal doesn’t reflect your financial capacity.
At Hoyes, Michalos & Associates, we have extensive experience negotiating with CRA. We’ll help you present a proposal acceptable to both you and the Canada Revenue Agency.
Is a Consumer Proposal Right for Your CRA Debt?
If you can’t work out a repayment plan with the CRA, consider a consumer proposal. It’s a powerful way to reduce your tax debt, stop collection actions, and regain control of your finances.
Talk to a Local Licensed Insolvency Trustee Today
Take the first step toward debt freedom—schedule your free, no-obligation consultation today.
Why Choose Hoyes, Michalos & Associates?
✅ Trusted Since 1999: Helping Ontarians get out of debt for over two decades.
✅ Local Experts: Offices across Ontario with experienced Licensed Insolvency Trustees.
✅ Compassionate Help: We understand the stress of tax debt and are here to help you find relief.
You’re not alone—let’s work together to solve your CRA debt problems.
