Personal Bankruptcy & Filing Late Tax Returns

Late Tax

Table of Contents

Some of the people who file for Personal Bankruptcy with David Sklar & Associates have not filed their income taxes for several years. In general, this is a reflection of the financial chaos that their lives have become.

There are many reasons people have for not filing – but they seem to fall into five main categories:

  1. Fear that they owed the government money they could not pay
  2. Kept putting it off
  3. Lost their tax receipts/information slips
  4. Were intimidated by the whole process
  5. Did not know how to get help

Whatever the reasons for not filing, when a person files for Personal Bankruptcy they must bring their individual tax filings up to date.

Part of the duties of the Bankruptcy Trustee includes:

  1. filing Income Tax Returns for the year prior to the bankruptcy (if they have not been filed); and
  2. filing a pre-bankruptcy tax return for the period January 1st of the year the bankruptcy is filed into the day before the actual date of the bankruptcy.

In addition, DSAI also files post-bankruptcy tax returns for most of their clients. The post-bankruptcy return is for the period from the first day of the bankruptcy, to the 31st of December for the year the bankruptcy was filed in.

As part of the Bankruptcy process, the Canada Revenue Agency (CRA) is informed that a bankruptcy has been filed. If there are unfiled tax returns, the CRA will send a ‘demand’ letter insisting that the tax reporting be brought up to date.

In the case where a person in Bankruptcy (a bankrupt) has not filed their Tax Returns for several years, DSAI will recommend several firms that can complete your Tax Returns for you.

Here are some of the most frequently asked questions about late income tax filings:

What if the tax receipts and records are missing?

Good news, CRA has copies of all your income and official tax receipts/information slips – and will forward them, if requested, for processing.

This is important to note – even if you are not in bankruptcy, you are able to get copies of tax receipts that you have lost, from the CRA.

What happens if there are rebates on a bankrupt’s late tax returns?

If there has been no fraud, tax rebates will normally go into the individual’s bankruptcy estate as assets for disbursal among the unsecured creditors.

What happens if there are taxes owing on a bankrupt’s late tax returns?

If there has been no fraud, they will normally go into the individual’s bankruptcy estate as debts and will be covered by the bankruptcy.

What does all of this mean to people in Personal Bankruptcy?

In most cases, getting their tax returns up to date brings a sense of relief. This is part of the process of getting the ‘fresh start’ that is the goal of bankruptcy.

In some cases, it can result in the individual becoming aware of credits such as GST and disability credits, that they will qualify for after they have been discharged from their bankruptcy. These individuals can look forward to any such benefits in the future.

Final Note: Whether or not you are contemplating Bankruptcy – keeping your tax filings up to date is strongly recommended.

Photo by RODNAE Productions

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The team at David Sklar and Associates Inc are very professional and are willing to help you get out of debt. Highly recommended.
Melissa MacKenzie
12:35 29 Mar 23
I would like to thank the team at David Sklar and associates inc. for all the time and effort they put in to support this process for me. This topic can be challenging to disclose but a big thank you to Christine for going above and beyond in guiding me through all my options and supporting me through the decisions. I cannot recommend this group enough , as they have shown me compassion , knowledge , and understanding throughout the entire process. I look forward to the next step of this process and learning how the proper way of becoming financially educated through the support of their financial counselling team. For anyone who is struggling , just know that there is a wonderful group of educated professionals at David Sklar who are available to help!
Michelle Plouffe
18:45 14 Mar 23
It took me awhile to get up the courage to contact David Sklar but I’m so glad I did. Trina walked through my options with me and provided the knowledge I needed to make a decision to help turn my financial situation around. She is patient and empathetic and answered any and every question that I had. Trina provided me the reassurance I needed that I was making the best decisions for me and my family. I’m so happy that I reached out and now have a plan to get back on track.
M. Mackenzie
19:59 12 Mar 23
Trina was very helpful and thorough.
Sam M
15:26 12 Mar 23
Christine was very helpful, kind, and understanding. She explained everything thoroughly, answered any questions I had, and was responsive to any concerns I had. 100% would recommend
Katherine Campbell
17:29 08 Mar 23
Jackie Stanley is excellent she took the time to explain everything to me and I am so grateful to her for giving me a fresh financial start so if you have any doubts don’t and go see her if you want to achieve financial freedom!
Heather Helfield
21:24 06 Mar 23
Amazing friendly staff that knows what they are going. They make a difficult situation not so bad. Would give 10 stars if I could.
alie Balan
22:37 25 Feb 23
Very helpful and kind and gave me all the available options before helping me decide which one was best for me. I would definitely recommend Jackie
Alison Rivard
01:01 21 Feb 23
Great experience i was in financial trouble and someone of my friends recommended this company. Cori is a wonderful and welcoming person she did a very good job and came up with a smooth and flexible monthly payment after the reduction. i highly recommend this company. Thank you David sklar and special thanks to Cori.❤️🙏🏻
Jasmine Joseph
22:08 13 Jan 23
Met up with Mr. Jason Sklar to discuss more in person, very thorough and clear. He is very kind and thoughtful, I will be referring anyone with the same situation to David Sklar & Associates.
Ariel Domingo
02:33 29 Dec 22
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