Personal Finance

what happens if people CANNOT pay their taxes?

  • Last Updated:
  • May 1st, 2020 2:28 pm
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[OP]
Sr. Member
User avatar
Nov 7, 2013
556 posts
156 upvotes
the 604

what happens if people CANNOT pay their taxes?

serious question.

filed my taxes, and like many business owners and self-employed, i pay quarterly. these amounts are not small.

my Q1 was ok, but Q2 was destroyed, and Q3 looks to be down. having government and property taxes deferred to later in the year is still going to suck. got cash / rainy day fund / security blanket — and my overhead is small — so thankfully, i can afford pay, along with my mortgage and credit card bills. but i suspect there's going to be LOTS of other self-employed or business owners / property owners who won't have two goddamn loonies to rub together when the bill is due.

so what happens?

the country, provinces and cities will need to start hitting the massive deficits caused by pausing the economy. but you can't get blood from a stone, right?
9 replies
Deal Addict
Jan 19, 2017
4093 posts
2328 upvotes
AMRadio wrote: serious question.

filed my taxes, and like many business owners and self-employed, i pay quarterly. these amounts are not small.

my Q1 was ok, but Q2 was destroyed, and Q3 looks to be down. having government and property taxes deferred to later in the year is still going to suck. got cash / rainy day fund / security blanket — and my overhead is small — so thankfully, i can afford pay, along with my mortgage and credit card bills. but i suspect there's going to be LOTS of other self-employed or business owners / property owners who won't have two goddamn loonies to rub together when the bill is due.

so what happens?

the country, provinces and cities will need to start hitting the massive deficits caused by pausing the economy. but you can't get blood from a stone, right?
JT said he can't promise there won't be an y tax hike after the Covid. is over.
Deal Addict
Oct 13, 2006
2315 posts
795 upvotes
Burnaby
The federal government could change the interest free loans to forgivable loans, but then we all pay.
Deal Addict
Jan 15, 2017
3760 posts
3175 upvotes
They will be forced into bankruptcy and will have to deal with that outcome. Self-employed business owners may have the most to lose if they have left their business obligations open to personal risk. Bankruptcy trustees are preparing now for an increase in business later this year and next year.
Deal Addict
Dec 4, 2016
1873 posts
892 upvotes
Depends on how the business is incorporated. Even in economic boom times, small businesses like restaurants go bankrupt all the time, due to fierce competition and low barrier of entry, so not every business is expected to be saved. If the loans on the business is personally guaranteed, a personal bankruptcy will probably have to happen.

Business loans secured by a limited liability corporation is much harder to get, and carries much higher interest rates, than personal loans secured by a wage earner, for good reason.
Deal Addict
May 16, 2017
1561 posts
1965 upvotes
To answer the OP's question about TAXes:

https://www.canada.ca/en/revenue-agency ... -full.html


In extraordinary situations where your business cannot pay in full, you may qualify for a payment arrangement or taxpayer relief.

Payment arrangements
A payment arrangement is an agreement that your business makes with the CRA. It allows your business to make smaller payments over time until you have paid your entire debt including applicable interest.

Before your business makes a payment arrangement, you may need to show that you have tried to pay your debt in full by borrowing money or reducing expenses. As a business, you may also have to fully disclose your financial records.

The Payment Arrangement Calculator lets you calculate payment options and it includes the prescribed Canada Revenue Agency interest rates. The Income and Expense Worksheet will help you to calculate your available net income to pay your debt.
Deal Addict
User avatar
Sep 29, 2003
4792 posts
398 upvotes
GTA
JT will be absolutely implementing a national covid tax .. i would anticipate a doubling of the GST shortly.. and even that wouldn't put a dent in the national debt
Sr. Member
Mar 1, 2020
573 posts
185 upvotes
GTA West
In all seriousness, what happens to those in bankruptcy? They still cannot be jailed right? so in a way, they are forced to pay these debts and is like "being in jail", but then do they get anything to eat? Or what? Eg can you confiscate any and all of their assets incl clothes, old car, etc?.
Deal Addict
User avatar
Mar 3, 2005
1022 posts
724 upvotes
Mississauga
in a bankruptcy, all your non-exempt assets (usually), and you excess income (beyond guideline standards) will be used for the benefit of your creditors for a period of time (9 months and/or longer if you have excess assets, income, or you have been bankrupt before).
Deal Guru
Feb 9, 2009
10786 posts
9160 upvotes
ferkel wrote: JT will be absolutely implementing a national covid tax .. i would anticipate a doubling of the GST shortly.. and even that wouldn't put a dent in the national debt
Good luck if he tried to double gst his ass would be out before you know it

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