income tax /bankruptcy

March 7th, 2008 by Questions

Bill C-12, which I understand is not yet in force, says that if an insolvent person has income tax debt of over $200,000.00 representing over 75% of his debts he cannot be discharged from this debt without a court order; whereas the old Act treats income tax as an ordinary unsecured debt. If he makes an assignment in bankruptcy now and then the new legislation comes into effect before he is discharged, will he be subject to the old Act or the new legislation in his application for discharge of the income tax debt?


One Response to “income tax /bankruptcy”

, Barton Goth GCO Bankruptcy Trustees said:

You are correct there are changes that will impact debtors with significant tax. While I can’t say with certainty as some of the rules that will go along with Bill C-12 haven’t been fully flushed out yet but I would expect that anyone who files a bankruptcy prior to the laws becoming active will follow the current laws. This is what has happend in practice with both of the last amendments to the BIA, but at this point it is purely speculation as until the rules have been written and distributed there is no way for anyone to know for sure.

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