TAX TIP The CRA Would Like to Remind You That it Has Resumed Debt Recovery Activities; Here's How it May Impact Your Benefit, Credit, and Refund Payments
Thursday, 23 March 2023 10:21.AM
The Canada Revenue Agency would like to remind you that it resumed its activities aimed at offsetting taxpayers' debt last October. Offsetting involves proactively applying tax refunds and benefit payments (such as the GST/HST credit) to tax and other government debts.
How offsetting works
Offsetting is a standard operating procedure that was used pre-pandemic by the CRA to collect outstanding taxpayer debt.
In May 2020, the CRA proactively paused most offset mechanisms in response to the COVID-19 pandemic. The pause was a temporary measure, like other COVID-19 relief tactics, to support taxpayers during a challenging time.
Resumption of offsetting activities
Since October 2022, the CRA has resumed offsetting personal income tax refunds to recover outstanding debt from COVID-19 benefits. This decision was further reinforced by recommendations made two months later in the Auditor General of Canada's 2022 Reports 9 and 10: Specific COVID-19 benefits, tabled in December 2022.
With the recent launch of the annual tax-filing season on February 20, 2023, the CRA would like to reiterate that it is resuming the offsetting process, as a greater number of tax refunds could be subject to this practice. These deductions could apply, in particular, to debts related to COVID-19 benefits.
How payments are applied to offset debt
It's important to note that, unlike other benefits, the Canada child benefit (CCB) payment can only be used to offset a CCB debt. Other types of child benefit payments can only be used to offset a debt related to the same benefit. To learn more about how government payments can be applied to specific debts, visit canada.ca/balance-owing.
Cases of financial hardship
Although the CRA is responsible for collecting debt from taxpayers, it understands that there are still individuals and families experiencing significant financial difficulties. Offsets may impact some individuals who have already established a payment plan with the CRA. Anyone who is experiencing financial hardship is encouraged to contact the CRA immediately to discuss their options.
How to avoid incurring a debt in the future
Government debt can result from a change in eligibility for benefits and credits, or an overpayment. The easiest way to avoid incurring a debt is to let CRA know as soon as possible when your situation changes as you may no longer be eligible for certain benefits or credits.
SOURCE: Canada Revenue Agency
- 21-Dec-2023 02:37 PM TAX TIP Businesses: Here Are the Top Changes this Year that Will Affect Business Taxes in 2024
- 19-Oct-2023 12:00 PM TAX TIP Did You Know that there are Business Services that Can Make it Faster and Easier for You to Meet Your Tax Obligations?
- 14-Oct-2023 06:33 PM TAX TIP Warning: Watch Out for Tax Schemes Involving Multilevel Marketing Businesses!
- 20-Jul-2023 10:21 AM Taxpayers' Ombudsperson Requests That the Canada Revenue Agency Make Improvements to Respect Canadians' Right to Be Represented by a Person of Their Choice
- 05-Jul-2023 02:34 PM TAX TIP Get ready: the CRA is in its summertime benefit period!
- 19-Jun-2023 02:23 PM TAX TIP Applying for the Disability Tax Credit is Easy With Our New Digital Form
- 13-Jun-2023 02:46 PM TAX TIP June 15, 2023, is the Deadline for Self-Employed Individuals to File Their 2022 Income Tax and Benefit Return
- 18-May-2023 12:00 PM ONTARIO JOBS 💵 Moving Forward with Building a Strong Ontario
- 03-Apr-2023 04:33 PM TAX TIP CRA Debt Recovery Activities May Impact Upcoming Benefit, Credit, and Refund Payments
- 27-Mar-2023 10:21 AM TAX TIP Voices Prepares Voice Actors for Tax Season With Tax Education Campaign