bankruptcy and income tax refund

September 2nd, 2008 by Questions

Ok , if one has gone bankrupt on Feb/07 and their income tax is filed by the trustee- (2006 income-thats 2007 income tax period- Then trustee would file the 2008 income tax for income from 2007 – Two files are done –
2007 income and a tax report for Jan07-Feb 07- pre bankrupcy- Now 2006 was not a refund- clients owed revenue canada- these balances were wriiten off due to bankruptcy and then the 2007 income tax year , there is refunds because they used son`s tuition fees , available.

Dose the bankrupt client receive their income tax refund, if the trustee is paid off its fee of 1950.00
And this is the clients second bankruptcy.The system when checked says file was not processed yet. Its 4 months since income tax was filed. Is it necessary to get a discharge before income taxes are refunded?
Thank you

Posted from: Nova Scotia


One Response to “bankruptcy and income tax refund”

, Barton Goth - Goth & Company Inc. - Bankruptcy Trustees said:

The bankruptcy fee and taxes are not related issues. You are responsible to pay the fee that is set and if there happens to be a refund from any year up to the year you filed for bankruptcy, then this refund is lost as it is seen as a non-exempt asset.

It is not unusual for the pre or post bankruptcy tax refund to take up to 6 months to be processed, but in normal circumstances this wouldn’t hold up your discharge. However, in your situation we have a second bankruptcy, so it is likely not the refund holding things up but the presence of the second bankruptcy.

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