Doing your taxes when filing for bankruptcy
What is bankruptcy?
Bankruptcy is a legal process performed by Industry Canada under the Bankruptcy and Insolvency Act, by which you may be discharged from most of your debts.
When you file for bankruptcy, the trustee becomes the administrator of your property and assets. One of the roles of the trustee is to wind up the property by selling all the assets and depositing the funds in trust for the creditors in bankruptcy.
Innovation, Science and Economic Development Canada is responsible for the enforcement of the Bankruptcy and Insolvency Act. The Superintendent of Bankruptcy, the Bankruptcy Tribunal, the Official Receiver in Bankruptcy, and the trustee are all under its authority.
The first identification of a bankrupt individual is done when the trustee give us a completed Form DC905, Bankruptcy Identification Form. This should be done as soon as the trustee receives your estate number from the Office of the Superintendent of Bankruptcy. Industry Canada will then give us any future updates related to the estate in bankruptcy.
What to file?
If an income tax and benefit return had to be filed for the year prior to the year of bankruptcy and you did not file it, the trustee must immediately file one on your behalf. The trustee must also file an income tax and benefit return for the period from January 1 up to the day before the date of bankruptcy; this return is called the pre-bankruptcy return.
The trustee may also file an in-bankruptcy return to report income from liquidated assets (for example, RRSPs) or from businesses the trustee winds up for the benefit of creditors.
It is your responsibility to file an income tax and benefit return for the post-bankruptcy period, which is from the date of bankruptcy to December 31, if the trustee does not file one on your behalf.
When an income tax and benefit return is filed by you or the trustee for the year of bankruptcy, it is important to clearly indicate that it is a pre-bankruptcy, in-bankruptcy, or post-bankruptcy return above the "Identification" section on page 1 of the return. Trustees should not insert their own address in the "Identification" section when preparing any return on your behalf. The Office of the Superintendent of Bankruptcy already provides us with the contact information for all registered trustees on a regular basis.
Are you getting a refund?
Refunds that are issued as a result of returns for years prior to the year of bankruptcy are considered to be the property of the estate in bankruptcy. As a result, these refunds will be sent to the trustee. Any refunds issued in relation to returns for years subsequent to the year of bankruptcy will be sent to you, unless the trustee has obtained a court order.
For the year of bankruptcy, any issued refund related to the pre-bankruptcy return will be sent to the trustee. Issued refunds related to the post-bankruptcy return will also be sent to the trustee if your bankruptcy assignment date is July 7, 2008, or later. Post-bankruptcy refunds that are issued for bankruptcies with an assignment date prior to that will be sent to you, unless the trustee has obtained a court order or has provided us with an Authorization and Direction letter.
For more information
- Call 1-800-959-8281.
- If you have questions about bankruptcies that do not relate to income tax matters, contact the Office of the Superintendent of Bankruptcy.
- To get advice from an expert, contact a trustee in bankruptcy. See Find a Licensed Insolvency Trustee or look in the yellow pages of your telephone directory under "Bankruptcies – Trustees" to find the name of a bankruptcy trustee for your province or territory.
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