Income Tax and Personal Bankruptcy

Wednesday, April 26, 2017 - 22:16

Bankruptcy, Government Debt


For Canadians, April 30 is the official deadline to file your personal income tax return with the Canada Revenue Agency. Because April 30 falls on a Sunday, your return will be considered filed on time if it is received or postmarked on or before May 1, 2017. If you file your return past the deadline you will be assessed a late filing penalty. If you owe income taxes it must be paid on or before this date to avoid getting charged interest. If you can’t afford to pay what you owe the CRA, give them a call and ask them if you can work out a payment plan.

If you have recently filed personal bankruptcy, your income tax return will be a little different this year.

The licensed insolvency trustee that you filed bankruptcy with is required to file your income tax return for the tax year in which you file personal bankruptcy. The tax return relating to the year in which you file personal bankruptcy is not standard. In fact it is not one tax return, instead it is two tax returns - pre and post.

The pre income tax return relates to the period from January 1 to the date of bankruptcy. Any debt owing on your pre income tax return is a debt which was incurred prior to filing personal bankruptcy and therefore it is included.

The post income tax return relates to the period from the date of bankruptcy to December 31. Any debt owing on your post-bankruptcy income tax return is a debt which was incurred after the date of bankruptcy and therefore is not included.

You are required to pay any debt owing on your post-bankruptcy income tax return. If there is a refund on either your pre and/or post income tax returns, these refunds will be paid to your trustee.

If you’ve recently filed bankruptcy with us and have questions regarding your income tax return, contact us immediately so we can answer your questions before the April 30 deadline.