Jan 26th, 2023
Apr 14th, 2020
By Louis-Frédérick Côté
As you may already know, due to the recent pandemic, certain GST and QST returns and payments deadlines have been postponed until June 30, 2020, the whole without interest and penalties. But what should taxpayers do if they cannot pay their tax bill by or even after June 30, 2020? The options include bankruptcy, a proposal in bankruptcy, or restructuring. Yet another option is to conclude a payment agreement with Revenu Quebec whereby the agency would waive or cancel penalties and interests.
The best course of action for taxpayers is obviously to file their returns and pay the tax owed in due time. The worst course of action for taxpayers would be for them to not file their returns and omit to pay in due time, since penalties would apply. Alternatively, taxpayers may want to file their returns in due time and conclude a payment agreement with Revenu Québec. In these last two cases, we would be able to assist taxpayers in dealing with Revenu Québec in negotiating a payment agreement that could include the waiver or cancellation of interests and penalties. Such an agreement in the context of GST and QST could also include a cancellation or waiver of the automatic fees applied on assessments by Revenu Quebec.
Note that the administrative policies relating to QST are almost identical to those relating to GST and HST, although they are respectively governed by a provincial law and a federal law. Both laws are administered by Revenu Quebec. Further, note that in negotiations, Revenu Quebec will analyze each situation on a case-by-case basis. Besides, if the taxpayer’s financial hardship is caused by COVID-19, it would likely be possible to make the argument that the taxpayer’s failure to fulfill their tax obligations is due to exceptional circumstances.
To establish a taxpayer’s inability to pay, an evaluation of the financial situation of the taxpayer must be provided, which would generally include financial statements, account statements for the last 12 months, and other financial information. For corporation or non-incorporated businesses, Revenu Quebec might analyze the income, expenses, assets and liabilities of the family unit of the director or the person carrying on the business.
Regarding exceptional circumstances, Revenu Quebec and the Canada Revenue Agency have both recognized that exceptional circumstances over which taxpayers have no control such as natural disasters, serious diseases, or the death of a close family member may warrant granting taxpayer relief applications. COVID-19 and its severe consequences would undoubtedly fit the description of those kinds of circumstances contemplated by the administrative policies of Revenu Quebec and the Canada Revenue Agency.
In processing such an application, Revenu Quebec will consider the history of the taxpayer’s dealings with the agency. Those with better records might have a better chance of obtaining some kind of relief.
Although the relevant form to submit such an application is not mandatory, it is recommended to use it and to provide with it the relevant documentation and written reasons for the application. This is also the kind of work that we can assist taxpayers in performing, in collaboration with the taxpayer and their accounting professionals.
One possible strategy at the moment would be to negotiate a payment agreement with Revenu Quebec whereby the agency would waive or cancel interests and penalties for the duration of the agreement.
Finally, note that if negotiations with Revenu Quebec were to not yield the expected result, taxpayers can ask for a review of the agency’s decision, be it through administrative or judicial channels.