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Alberta bankruptcy Q&A forum

Question:

 

My husband and I have not filed our taxes for four years. We are both self-employed (independent of each other) and are considering bankruptcy to deal with tax debt it it is too large of a sum to manage. I started my business 3 years ago, so really have no idea how it's going to look tax-wise. We also have children, so once our taxes are done (recently submitted to our accountant) I expect to receive a lump sum from Child Tax Credit for back payments. I have read that monthly CTC payments are not affected by bankruptcy as they are not considered income. However, what about the lump sum? Will I be expected to pay back taxes with that money? What will happen if I receive that money and then decide to declare bankruptcy?


From:

 

Grant Thornton Limited

Date:

 

Aug 12, 2014

Answer:

 

Hi Child Tax benefit is income and must be disclosed for the purposes of calculating payments to the estate. Lump sum Child Tax benefits relating to a period prior to the bankruptcy will be paid to the Trustee by CRA. If you receive the funds before bankruptcy (assuming CRA does not seize it and apply it against your outstanding tax debt)you will be required to disclose receipt of the funds and how the funds were disposed.

Marie Kozlowski
T 403-296-3082
Marie.Kozlowski@ca.gt.com

 

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