Howard Hayes

Yes.  A tax debt to CRA is a debt you can include into either a Personal Bankruptcy or a Consumer Proposal.

(Unfortunately, you likely not going to be able to include a tax debt into a debt management plan with a credit counsllor or debt settlement company).

With CRA debts, it’s important that if you file either a Consumer Proposal or Personal Bankruptcy, then you’d want to make sure that your tax returns are up to date.  Either use the latest software, or use a tax accountant or tax return preparation company to get your returns filed. 

In a proposal, it could be a win win situation to have your taxes up to date.  If you file and you get a refund, you’d keep the refund.  If you file the taxes and owe, you can include the debt into your proposal. 

In a bankruptcy, CRA will check to see if your returns are up to date.  If you have missing tax returns, then it could be likely that they’d consider opposing your discharge from the bankruptcy.  They may want to force the issue to have to go to court, so that you can explain why a return has not been filed. 

If you owe CRA more than $200,000 or if your tax debt represents more than 75% of your debt load, then you’ll likely have to attend court at the end of the bankruptcy to explain why before you can be discharged from the bankruptcy.

If you have tax debts and are considering your options, talk to a trustee.  A good trustee will be able to tell you exactly what you may need to do and what options are available to you. Call us at 516 622 3773 or email me your question.