Does a consumer proposal work differently than bankruptcy for tax debt in Ontario?

Yes, meaningfully so. A consumer proposal is a different, less drastic insolvency tool than bankruptcy under the federal Bankruptcy and Insolvency Act - instead of liquidating through bankruptcy, it lets you offer your creditors, including CRA, a formal proposal to repay a portion of what you owe over time. CRA generally participates in consumer proposals as a creditor in a way similar to how it's treated in a bankruptcy, but the practical outcome is different: a consumer proposal is about negotiating a partial repayment arrangement rather than the discharge process that applies in bankruptcy.

Which path is actually better depends heavily on your specific debt and financial picture - the size of the tax debt, your income and assets, and what other debts you're also dealing with all affect whether a consumer proposal or bankruptcy makes more sense for your situation. Neither is automatically superior in every case, and the two lead to genuinely different outcomes: bankruptcy generally works through discharge of debts, with the exceptions covered elsewhere, while a consumer proposal works through a negotiated, partial repayment that both you and your creditors agree to. Getting advice tailored to your specific debts and circumstances is the only reliable way to know which path fits your situation.