Filing Your Income Tax Return After Bankruptcy
As part of the bankruptcy process, your Licensed Insolvency Trustee is required to file your income tax return for the year of bankruptcy and any returns that came due during the calendar year prior to bankruptcy.
The Trustee will break your income tax return into 2 portions based on the bankruptcy filing date. The first portion is referred to as the pre-bankruptcy filing; this covers the period of January 1 until the date of filing. The second portion is referred to as the post-bankruptcy return and covers the day after you filed for bankruptcy until December 31.
Any tax refunds for either of the above periods will come directly to your bankruptcy estate for the benefit of the unsecured creditors who have filed a provable claim.
Tax obligations from the pre-bankruptcy portion of the return will be discharged by your bankruptcy. However, post-bankruptcy tax obligations will be your responsibility as they are considered as new debt that was incurred after the date of bankruptcy.
You will be responsible for filing your tax return after bankruptcy and Canada Revenue Agency requires that you submit a paper return for that year. If you are having your tax return completed by a third party, you should make them aware that it cannot be filed electronically and that a paper return must be submitted. You can submit subsequent years electronically.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.