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Lost tons of money

I’m a sole proprietorship and I did not file my income tax returns for 2001 and 2002 due to severe personal investment losses. I’ve been contacted by Revenue Canada for an audit and have already told them that I need to submit those income tax reports. The amount I need to pay is substantial and I figure I will need to file a Divisional 1 bankruptcy proposal since the amount is greater than 100k, plus the penalties and interest. Is Revenue Canada likely to refuse my proposal due to the fact that I did not file my income tax returns on time ? Will they use that against me ?

One Response to “Lost tons of money”

A licensed trustee said...

The Canada Revenue Agency (CRA), formely called Revenue Canada, will try to recover as much money as possible for the tax payers if you file a proposal. The fact that you did not file your taxes on time will not directly influence CRA’s decision to accept or reject your proposal, but they will not even consider the proposal until all outstanding tax returns have been filed.

If you intend to file a Division I proposal you need to be aware that CRA will require a clause that states “if you fail to file or pay your current taxes while the proposal is in place the proposal may be annulled by the Court”. In otherwords, if you file a proposal you have to make certain from that date forward you file your taxes on time and you make the regularly required instalments and payments towards any new taxes that you may owe.

All of this will be discussed with you in detail by the trustee that assists you with your proposal. If you haven’t spoken to a trustee about your situation then I suggest you use the links on the righthand side of the page to contact a trustee in your area.