If you are considering bankruptcy in Ontario, or you are already in the process, the Office of the Superintendent of Bankruptcy (OSB) has now updated the 2026 surplus income guidelines. The new Directive No. 11R2-2026 was issued on March 27, 2026, replacing the 2025 version and updating the Superintendent’s Standards for the 2026 year.
These annual thresholds matter because they help determine whether a person in bankruptcy may have to make surplus income payments. They can also affect how long a bankruptcy lasts before an automatic discharge may be available. Under Canadian insolvency law, only a Licensed Insolvency Trustee can administer a bankruptcy or a consumer proposal.
Quick Answer: What Changed for 2026?
The main change is that the OSB has updated the Superintendent’s Standards for 2026. These standards are based on family size and are used as part of the surplus income calculation. The 2026 standards were updated using a 2.16% adjustment to the 2025 amounts to reflect the 2026 Consumer Price Index growth as a result of inflation.
2026 OSB Surplus Income Thresholds
For 2026, the monthly Superintendent’s Standards are:
- 1 person: $2,716
- 2 people: $3,381
- 3 people: $4,157
- 4 people: $5,047
- 5 people: $5,724
- 6 people: $6,456
- 7 or more people: $7,188
In simple terms, these figures are the benchmark used by a Licensed Insolvency Trustee when assessing whether your household income is above the level set by the OSB for your family size.
What Is Surplus Income in a Bankruptcy?
Surplus income is not just your gross pay or take-home pay viewed in isolation. Under Directive No. 11R2-2026, the calculation starts with the family unit’s monthly income, then adjusts for certain deductions and permitted non-discretionary expenses discussed below. The Licensed Insolvency Trustee reviews the income and expense information for the bankrupt and the family unit to determine whether there is surplus income under section 68 of the Bankruptcy and Insolvency Act.
How Surplus Income Is Calculated
The OSB directive sets out a step-by-step approach.
1. Family Income Is Reviewed
The bankrupt must complete the monthly income and expense statement for the family unit using Form 65. The family unit includes people living in the household who benefit from or contribute to household income or expenses, and in some situations even a person who does not live in the home may still be treated as part of the family unit.
2. Certain Deductions Are Applied
The directive says the family unit’s total monthly income is determined after deducting items such as minimum statutory deductions for employees, and for self-employed individuals, certain business expenses and required remittances that are required by the Income Tax Act or similar provincial legislation.
3. Certain Non-Discretionary Expenses May Be Deducted
The directive also allows specific non-discretionary expenses to be considered, including child support, spousal support, child care, some medical-condition expenses, certain court-imposed fines being paid, and certain employment-related expenses amongst others.
4. The 2026 Standard for Your Family Size Is Subtracted
Once available monthly income is determined, the Licensed Insolvency Trustee compares that amount to the 2026 Superintendent’s Standard for the number of people in the family unit. Any amount above the standard is the starting point for determining surplus income.
When Do You Have to Pay Surplus Income?
There is an important threshold in the directive. If the bankrupt’s monthly surplus income is less than $200, no payment is required to the estate under the directive. If the monthly surplus income is $200 or more, the bankrupt is generally required to pay 50% of the monthly surplus income to the estate, subject to the family situation adjustment and averaging rules.
That means not every person whose income is above the OSB standard will automatically make a payment. The amount and whether a payment applies can depend on the full family income picture, family size, deductions, and how the income is averaged during the bankruptcy.
How the New 2026 Guidelines May Affect Your Bankruptcy
The practical impact usually comes down to two questions:
- Will you have to make monthly surplus income payments?
- Will your bankruptcy last longer?
Your Payment Obligation May Change
Because the 2026 thresholds are higher than the previous year’s thresholds, some people may have less surplus income than they would have had under the 2025 standards, depending on their earnings and household circumstances. This does not mean everyone will pay less, but the updated benchmark can change the calculation. That assessment has to be made based on your actual family income and allowed deductions.
Your Discharge Timing May Also Change
For a person eligible for an automatic discharge, the OSB directive says that if average monthly income shows a requirement to make payments under section 68, the bankrupt must continue making those payments for an additional 12 months, which results in a 21-month bankruptcy for most first-time bankruptcies with surplus income, or 36 months for most second bankruptcies with surplus income. If there is no surplus income payment requirement, the usual automatic discharge timing is 9 months for most first bankruptcies and 24 months for most second bankruptcies, subject to the Act and any opposition or exception.
Example: How the 2026 Threshold Can Matter
Here is a simple example.
Assume a single person in bankruptcy has available monthly income of $3,000. Under the 2026 standard for a one-person household, the OSB benchmark is $2,716. That would leave $284 in monthly surplus income. Because that amount is at least $200, the person is required to pay 50% of that amount, or $142, per month to the estate, subject to the trustee’s review and any further adjustments required by the directive. They will be required to pay this amount for 21 months if it is their first bankruptcy, and for 36 months if it is their second bankruptcy.
A different household with a different family size could have a very different result even at the same income level. That is why surplus income discussions should always be tied to the household facts, not just one salary figure.
Why Family Size Matters So Much
The OSB standards increase with each additional person in the family unit. In other words, the benchmark for a single person is much lower than for a family of four or five. This can make a major difference in whether there is any surplus income at all.
This is also why a bankruptcy assessment should include a careful review of:
- who is part of the family unit,
- who contributes to household income,
- what mandatory deductions apply, and
- whether there are non-discretionary expenses the directive allows to be factored in.
What If Your Income Changes During Bankruptcy?
The directive specifically requires the Licensed Insolvency Trustee to review the bankrupt’s financial circumstances more than once. For bankrupts eligible for automatic discharge, the trustee reviews the file at the start and again in the eighth month for a first bankruptcy or the 23rd month for a second bankruptcy, at a minimum, using average monthly income to determine whether surplus income payments apply. If the debtor is aware that their income is changing significantly, they can advise the LIT and have their surplus income reviewed earlier to ensure proper payments are being made.
This is important because income can go up or down during the bankruptcy. If income rises, surplus income may start to apply or increase. If income falls, the amount may be reduced or there may be no payment requirement based on the average.
Does Surplus Income Mean Bankruptcy Is the Wrong Option?
Not necessarily. Surplus income is one factor in the bankruptcy analysis, but it is not the only one. A person may still consider bankruptcy where it is the most practical insolvency remedy available. In other cases, a consumer proposal may offer more predictable monthly payments, especially where income is stable and above the surplus income threshold. Only a Licensed Insolvency Trustee can review your full financial picture and explain which formal option may fit your circumstances.
Final Thoughts on the 2026 Surplus Income Update
The OSB’s 2026 surplus income update matters because it can directly affect:
- whether you need to make surplus income payments,
- how much you may have to pay, and
- and how long your bankruptcy may last before discharge eligibility.
The new 2026 thresholds are now in force under Directive No. 11R2-2026, issued March 27, 2026. If you are weighing bankruptcy against a consumer proposal, the surplus income rules should be part of that conversation. A proper review should look at the whole household picture rather than income alone.
FAQ
What Are the 2026 Surplus Income Guidelines in Canada?
The 2026 OSB Superintendent’s Standards are monthly thresholds used in bankruptcy surplus income calculations. They range from $2,716 for one person to $7,188 for a family unit of seven or more.
Do You Always Pay Surplus Income If You Earn Above the Guideline?
Not always. The calculation depends on family unit income, permitted deductions, non-discretionary expenses, and how the income is averaged. Also, if monthly surplus income is less than $200 above the standards, then no payment is required under the directive.
How Much of Surplus Income Do You Pay in Bankruptcy?
Where the monthly surplus income is $200 or more, the directive generally requires payment of 50% of the monthly surplus income, subject to adjustments such as the family situation adjustment.
Can Surplus Income Make a Bankruptcy Last Longer?
Yes. For many people eligible for an automatic discharge, surplus income can extend the bankruptcy from 9 months to 21 months for a first bankruptcy, or from 24 months to 36 months for a second bankruptcy, subject to the Bankruptcy and Insolvency Act and the facts of the case.
Who Can File a Bankruptcy or Consumer Proposal in Canada?
Only a Licensed Insolvency Trustee can administer a bankruptcy or a consumer proposal in Canada.
