Debt and Your Company

Monday, May 11, 2020 - 21:04

Business Concerns


If your business is incorporated, then legally the business is a separate entity and its assets are owned by the business. In this case the incorporated company can go bankrupt if it cannot meet its financial obligations.

The assets of the business are sold as part of the company’s bankruptcy and used to reduce the liabilities. Certain classes of creditors may have preference over the assets and these creditors are usually paid first.

At Welker & Associates we help owners of incorporated companies deal with their debt issues, including government debt. There are three main government debts that business owners have to deal with:

  • Corporate income tax
  • HST
  • Payroll source deductions

Corporate income tax is a debt which owed solely by the corporation and is not the responsibility of the directors. However, HST and payroll source deductions are director’s liabilities. As director’s liabilities these debts are owed jointly and severally by the directors of the corporation personally, and can be included in and discharged by filing a consumer proposal or personal bankruptcy just like any other debt. 

Government debts only have special rights if you do not deal with them by virtue of the enhanced garnishment provisions provided for in the Income Tax Act and Excise Tax Act. These enhanced garnishment provisions allow the government to freeze your bank, issue a requirement to pay, garnishee wages or put a lien on your house without a court order. Filing a consumer proposal or bankruptcy immediately stops all government action and prevents them from taking any further action against your assets and/or income.  

If you are considering bankruptcy, contact our office so we can review your situation and discuss all of your options.

Latest Posts

How can you find debt relief?

Debt relief is your chance to put your financial problems behind you. For too many Canadians, debt has become a way of life. Too much debt can lead to high levels of stress. It can even impact your future. If you’re wondering how to find relief, we can help!

May 30, 2020

Bankruptcy, Consolidation Loans

Canada Emergency Response Benefit and Bankruptcy

The Government of Canada recently introduced the COVID-19 Emergency Response Act to help Canadians pay for essentials like housing and groceries and provide additional support to families with children.  

May 18, 2020

Bankruptcy