Last Updated on November 27, 2023 by Elidge Staff
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What to Do When You Owe Money to the Receiver of Revenue
When you owe money to the Receiver of Revenue, there are five things that you can do. In this article, we’ll discuss these options in detail, including how to pay your balance, how to apply for a suspension of debt, and how to arrange for payment.
How to pay your balance, how to apply for a suspension of debt, and how to arrange for payment when you owe money to the Receiver of Revenue.
Pay Your Balance by the Due Date When You Owe Money to the Receiver of Revenue
When you submit your tax return, the Receiver of Revenue will provide an assessment that includes two dates: the first payment due date and the interest-free grace period. If you pay the money before the grace period expires, you don’t need to pay any interest.
You can make a payment in several ways, such as:
- Electronic Funds Transfer (EFT) – You can transfer the money directly from your bank account to the Receiver of Revenue’s account using the payment reference provided in the statement of account.
- Cash payment – You can pay in cash at a bank or post office. You’ll need to provide the bank or post office with the payment reference provided in the statement of account.
- Credit card payment – You can make a payment using your credit card. The Receiver of Revenue accepts Visa and Mastercard. You’ll need to provide your credit card details and the payment reference provided in the statement of account.
It’s important to pay your balance by the due date to avoid interest charges and legal action by the Receiver of Revenue. If you’re unable to pay the full amount, consider applying for a payment plan or debt compromise.
To make a payment, you need to request a statement of account. The statement will provide you with a bank account name, a payment reference, and the amount due.
Apply for a Suspension of Debt When You Owe Money to the Receiver of Revenue
When you receive an assessment from the Receiver of Revenue, you are expected to pay any amount owed as per the assessment. However, if you disagree with the assessment, you have the right to object to it. This process involves filling out a dispute form and providing reasons why you believe the assessment is incorrect.
During this objection process, you can also request a suspension of debt. This is a temporary delay of your payment until the Receiver of Revenue completes the audit and makes a final decision on your dispute. The suspension of debt is not automatic, and you need to specifically tick the box for “suspension of payment” on the dispute form to request it.
It is essential to note that you can only apply for a suspension of debt if you have lodged a dispute with the Receiver of Revenue. If you haven’t yet objected to the assessment, you cannot apply for a suspension of debt.
If you decide to apply for a suspension of debt, it is crucial to provide reasons for your request. The Receiver of Revenue will consider your reasons before making a decision. Common reasons for requesting a suspension of debt include financial hardship or the belief that the assessment is incorrect.
In summary, if you receive an assessment from the Receiver of Revenue and there’s a dispute, you can file a notice of objection. As part of the objection process, you can also apply for a suspension of debt by ticking the box for “suspension of payment” on the dispute form. It is important to provide reasons for your request and note that a suspension of debt is not automatic.
Arrange for a Payment Plan When You Owe Money to the Receiver of Revenue
A payment plan is an option you can choose if you are unable to pay the full amount of your tax bill at once. To apply for a payment plan, you need to submit your tax return and receive an assessment from the Receiver of Revenue. Once you receive your assessment, you can go to the Receiver of Revenue’s website and click on the “payment arrangement” button at the top of your assessment.
By default, the Receiver of Revenue will give you six months to pay off the amount due. This means that you’ll need to pay a portion of the debt each month for six months until the full amount is paid. However, if you need more time, you can request an extension of up to 11 months. To do this, you’ll need to provide the Receiver of Revenue with your financial statements and cash flow projections.
It’s important to note that if you need more than 11 months to pay off your tax debt, you may be required to provide additional information to the Receiver of Revenue, such as a detailed business plan or a statement of assets and liabilities. This is because the Receiver of Revenue wants to ensure that you have a realistic plan in place to pay off your debt and that you won’t default on your payment plan.
Once you’ve submitted your request for a payment plan, the Receiver of Revenue will review your application and let you know whether your request has been approved or denied. If your request is approved, the Receiver of Revenue will provide you with a payment schedule that outlines how much you need to pay each month and when the payments are due. It’s important to stick to this payment schedule to avoid penalties and interest charges. If you miss a payment, you should contact the Receiver of Revenue as soon as possible to make alternative arrangements.
Debt Compromises When You Owe Money to the Receiver of Revenue
To apply for a debt compromise, you need to complete the necessary forms and submit them to the Receiver of Revenue along with supporting documentation that shows you’re unable to pay the full amount of tax owed. The Receiver of Revenue will then review your application and make a decision based on your financial circumstances.
If your application is successful, the Receiver of Revenue will typically offer you a payment plan or a lump-sum payment at a reduced amount. The amount of the compromise will depend on various factors, including the amount of the tax debt, your financial circumstances, and the Receiver of Revenue’s discretion.
It’s important to note that debt compromises are not guaranteed, and the Receiver of Revenue has the discretion to refuse your application. However, if you can demonstrate that you are unable to pay the full amount owed and are willing to work with the Receiver of Revenue to resolve your tax debt, a debt compromise may be a viable option for you.
Liquidation When You Owe Money to the Receiver of Revenue
Liquidation is a serious step to take as it involves selling off assets and can have long-term consequences for your financial situation. It’s important to note that liquidation is typically a last resort and should only be considered after exploring other options such as payment plans, debt compromises, or applying for a suspension of debt.
If you decide to proceed with liquidation, you’ll need to hire a liquidator who will take control of your assets and sell them in order to pay off your debts. The liquidator will be responsible for valuing your assets, finding buyers, and distributing the proceeds to your creditors.
There are different types of liquidation depending on the circumstances. For example, if you’re a business owner, you may need to consider voluntary liquidation, which involves voluntarily winding up the business and selling off assets to pay creditors. On the other hand, if you’re an individual, you may need to consider sequestration, which is a legal process of declaring bankruptcy.
It’s important to seek professional advice before proceeding with liquidation to ensure that it’s the right option for your specific situation.
When you owe money to the Receiver of Revenue, there are several options available to you. By paying your balance, applying for a suspension of debt, arranging for a payment plan, considering debt compromises, or initiating liquidation, you can take control of your financial situation and avoid penalties and interest charges.
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