Personal Bankruptcy and Filing Late Tax Returns

Filing Late Tax Returns

Filing Late Tax Returns & Personal Bankruptcy

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; and
  5. Did not know how to get help.

Whatever the reasons for not filing, when a person goes in to 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 in to 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 a Bankruptcy – keeping your tax filings up to date is strongly recommended.

 

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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I cannot emphasize enough how thankful I am for Jackie Stanley's help with filing for bankruptcy.All of us dread being put in this position and we have a million questions about the process but trust me Jackie makes it so easy for you that you don't have to do anything yourself!She is very kind and friendly and puts you at ease right away. She emphasizes with you and let's you know it's not your fault.Most importantly when you leave that first meeting you will not believe the load that is taken off your shoulders. You can actually feel it!You are a godsend Jackie and I can't thank you enough!!I hope you are highly valued there as much as you are by me!
Sue Murray
18:45 05 Dec 21
Putting together and executing a Consumer Proposal can be daunting, that is unless you work with Cori Naron at David Sklar & Associates Inc. Cori's advice and support has been instrumental over the past five years. Thank you Cori!!
Barry Kuntz
20:37 01 Dec 21
I’m very happy with the services I received for Jackie Stanley who helped me get my finances in order. It was a quick and easy process & all of my questions were answered.
Amanda Frappier
01:18 19 Nov 21
I have had the privilege of being supported by Jackie at David Sklar Associate. She was very helpful, very professional and very friendly. She gave me the help I need. Thank you Jackie for your help.
Alex Taylor
22:03 17 Nov 21
Got my probe solved, great service
arny raposo
17:02 11 Nov 21
Jackie at Daivid Sklar and Associates is such a pleasure to work with. She explained everything in great detail and is always there when I have a question or concern. She really cares about her clients.
Steve Medica
09:33 10 Nov 21
I filed a proposal with another group, which came in as a referral from one of my brokers. My experience went from ok to bad to worse, due to lack of communication and education on the process I was to embark on. I worked with Cori Naron in the past, and I came to her now for help on literally doing the work that the other group should have done. Cori stepped in, educated me, advised on rights, responsibilities, how the process works and what potential outcomes may happen. I do not have enough words of recognition and gratitude for what she did - she alleviated stress, anxiety, dead-end thoughts and she made me live again. Congrats to DSklar for hiring her and retaining such talent.
Giani Kokolakis
18:45 25 Oct 21
Very professional service. Before contacting David Sklar & Associates i contacted bunch of other firms they seemed fishy. After I spoke with Jason Sklar at Hamilton Office I discovered professionalism with hope. I was explained every step of my situation with solution professionally. Thank you David Sklar & Associates.
Wajay Awan
07:29 12 Oct 21
I met David a few months ago and i am glad I did. He has helped me all the way through my bankruptcy with good advice and explained every step of the process. David is a very down to earth and very professional. Anytime I've had a question I was able to reach out to David by phone or email and he always got back to me. If your struggling with your bills and need a way to get help, I strongly recommend David Sklar &Associates to help you. My experience with them on 1-5scale would be a 5;; My life is so much better now, thanks to David Sklar.
Bruce Locke
16:13 08 Oct 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Denise Simpson
15:17 09 Sep 21
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