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income tax refunds and bankruptcy

If I went bankrupt in february of 2009-and I am waiting on income tax refunds and back child tax credits for the years 2004-2007..do I also have to surrender these or do I just have to surrender my 2008 refund?

Posted from: Ontario

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One Response to “income tax refunds and bankruptcy”

A licensed trustee said...

Once you file for bankruptcy the Canada Revenue Agency if notified and any tax refunds for any year prior to the one you filed for bankruptcy in will be sent directly to your trustee. This is one of the trade-offs you make in order to have your debts eliminated.

Your GST rebates will be handled the same way, but your Child Tax Benefit (baby bonus) will not be. CTB are sent directly to you, but you must declare that income on your monthly report to your trustee and you may end up paying a portion to your trustee if it puts you over the surplus income threshold for your family.

The logic behind this is if you had filed your taxes properly and received the tax refunds, GST rebates and CTB over time you may have spent less on credit (or you may have used these funds to make payments on your debt). In return for eliminating the debt you lose these government benenfits.