Tax Deadline is Approaching
It’s that time of year again. Tax time always seems to cause a high degree of stress and anxiety for BC Residents. Actually, the stress is specifically associated to those individuals that don’t receive a tax refund, those of us that have a tax balance owing. Even if you have tax deducted at your place of work, the taxman can require you hand over some more cash. How much tax in 2014?
|Government of Canada – 2014 Brackets||Tax Rate|
|$0 to $44,701||15.00%|
|$44,701.01 to $89,401.00||22.00%|
|$89,401.00 to $138,586.00||26.00%|
Looking to find out exactly how much you will likely be owing for 2014? There are many good online tools that accurately will calculate potential tax payable.
|Government of British Columbia – 2014 Brackets||Tax Rate|
|$0 to $37,606||5.06%|
|$37,606.01 to $75,213||7.70%|
|$75,213.01 to $86,354||10.50%|
|$86,354.01 to $104,858||12.29%|
|$104,858.01 to $150,000||14.70%|
Tax rates are applied on a cumulative basis. For example, if your taxable income is more than $37,869, the first $37,869 of taxable income is taxed at 5.06%, the next $37,871 of taxable income is taxed at 7.70%, the next $11,218 is taxed at 10.5%, the next $18,634 of taxable income is taxed at 12.29%, the next $45,458 of taxable income is taxed at 14.70% and any taxable income over $151,050 is taxed at 16.80%.
Not enough money to pay taxes?
Revenue Canada will try to work with you, creating a payment plan to suit your budget, however you need to be aware that interest and possibly penalty that will be added to your outstanding balance. If you are unable to pay your taxes, Canada Revenue Agency (CRA) has the authority to register a lien against your house, car, or any other asset or property that might be in your name. CRA can also send a notice of attachment to your employer or your customers (if you’re self-employed) and garnish your income. They have the ability to garnish 100% of the self employed income.
Looking for options to tax debt?
There are 2 legislated options in Canada to deal with tax debt – a consumer proposal or a bankruptcy.
Unlike in the US, tax debt is dischargeable in Canada. That means that it goes away (or is written off) in either a consumer proposal or a bankruptcy. Upon the filing of a consumer proposal or a bankruptcy all collection action is stopped. CRA can no longer garnish your income to pay the tax debt. Generating income is the first step to getting your finances back on track.
It is important to know that only a licensed bankruptcy trustee can help you deal with income tax debt. Bankruptcy trustees are the only debt reduction provider authorized by the government to negotiate with CRA. Credit counsellors, credit or debt consultants, credit advisers, etc. cannot legally provide tax debt reduction.
Already have a tax debt issue?
Before you get your 2014 tax returns completed, talk to a bankruptcy trustee. If bankruptcy is your best solution, the trustee will complete your returns as part of the process.