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The headlines last month claiming that Canada Revenue Agency wrote off over $4 billion in debts in the last two years may not tell an accurate, story.

According to CRA records obtained under the Access to Information Act, CRA reports that the debts were declared noncollectable because the taxpayers had died, gone bankrupt, had become non resident, or could not be located.

Because tax debts often triple or more, penalties and interest become more than the tax debt by the time the debt is deemed noncollectable. Therefore the actual tax debt is likely a third of the claimed amount.

Further in a lot of cases, the tax debt was not the real debt but the results of a badly done audit or an arbitrary assessment issued by CRA where the taxpayer decides to declare bankruptcy rather than fight the assessment.

In any case the news headlines are certainly not an accurate representation of the tax debt written off.

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