I frequently get asked the question “can I include my income tax debt in a consumer proposal?”. Many people assume that since it is a government debt it cannot be included.
The answer is yes, the consumer proposal includes income tax debt. Canada Revenue Agency (CRA) is a debt just like any other debt and has the same voting rights.
There is however, one difference with income tax returns. CRA is allowed to apply your tax refund for the year you filed the proposal to the debt. For instance, if you filed your proposal in 2010, it would include all of the debt debt up to and including 2009. However, if you were entitled to a refund for 2010, it would be applied to your income tax debt. Some planning is required and you should speak with a tax professional if you have any questions about your future taxes.
Call me at 310-PLAN or email with your consumer proposal questions and we can try to work out a plan that is right for you.
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