Do you understand the process of garnishment? It is a legal procedure where a creditor may require a third party to turn over the bank accounts or the wages of the taxpayer. When you miss paying your taxes by CRA deadlines, you may face an CRA income garnishment. It allows CRA to seize your wages legally. It can also garnish all the money you have in your bank accounts or other assets that you may own until your tax owing is repaid in full.
A court order is not always required when it comes to an income garnishment. There are two distinct situations where a court order may not be required for income garnishment. The first situation is when a person assigns his or her wages to a credit union body. The second situation is when a person owes taxes which are unpaid to the CRA. In such cases, the CRA has the right to caution your employers directly and require the wages to be garnished.
When does the case of a wage levy arise? A wage levy is almost like an income garnishment. This action can be enforced and initiated by the CRA against a person for back taxes. In the case of income garnishment or a wage levy, the employer will receive the garnishment order notice. The employer is clearly required under the law to keep back the amount which has been specified in the garnishment order from the wages of the tax taxpayer.
In Ontario, the maximum amount of your wages that can fall under income garnishment is half of your gross monthly salary as per the Ontario Wages Act. Under this Wages Act, the social assistance, employment insurance and the pension payments cannot be touched under garnishment. This just cannot happen even if the funds are deposited into a specified account at particular financial institutions.
To handle a CRA income garnishment, you need professional help from a tax representative in order to stop a wage levy or a garnishment. You will be protected if you have an owing solution that is legally binding and which comes under the protection of the tax courts. People have two options to annul a CRA income garnishment so that all future activity pertaining to collections may be prohibited. The first option for an income garnishment to be revoked is to declare bankruptcy. The second alternative is to go the route of the consumer proposal. In this case, all the assets that you have are confined for repayment in order to reduced the amount you owe over a period not exceeding five years.
Some professional tax consultants negotiate with the CRA on your behalf and come up with a payment plan that may be fair to both sides and one which is within your payment capacity. A payment plan can be worked out with low monthly payments to avoid a CRA income garnishment .