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clients across Canada since 1987

Apr 26, 2017

Can a CRA jeopardy order prevent asset forfeiture?

When a high-net-worth resident of Ontario owes substantial amounts of money to the Canada Revenue Agency, situations may arise that require professional assistance. Having an experienced professional to intervene when asset forfeiture looms may be a strategic step to protect the debtor's financial interests. When a consumer challenges a tax assessment, the CRA may conclude that a risk exists that will prevent the collection of tax debt. It may then request the Ontario Superior Court or the Federal Court to issue a jeopardy order that will allow immediate action for the collection of tax debt.

For a jeopardy order to be issued, the CRA must show that certain grounds exist. These typically include a debtor who starts selling assets that formed part of the assessment for tax debt, or who transfers assets to family members or friends. Assets that could deteriorate, perish or lose value if collection is delayed may also give rise to a jeopardy order. A history of failure to pay tax debts or collection actions by other creditors may also pose a risk to the CRA's ability to collect tax debts.

Upon the court's grant of the jeopardy order, the CRA may proceed with immediate action. However, steps can be taken to delay or stop the collection of assets. These may include paying the outstanding amounts or providing the CRA with a standby letter of credit or a letter of guarantee from the bank. With the appropriate legal guidance, the debtor can even challenge the jeopardy order.

With the support and guidance of a team of lawyers who are skilled in navigating cases involving CRA accounts and asset forfeiture, any Ontario consumer may successfully motion the court to review a jeopardy order within a particular period. A lawyer can handle the legal proceedings such as advising the CRA of the intention to request a review and more. With skilled legal counsel as the first line of defence, a tax debtor's financial interests will be protected to the law's fullest extent.