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Retroactive Child Tax Credit lump sum

I am going to file a Proposal in the next 3 weeks (then proceed to bankruptcy if unsuccessful).

Two questions:
1) My wife may not have to file since the tax debt is mine. How will the retroactive CTC lump-sum payment to her (perhaps in the range of $7,000) be treated if I have to file for bankruptcy?

Will this lump-sum payment increase my reasonable Proposal amount (I have been told +75% to +100% of Bankruptcy amount).

2) We have a New Home(owned jointly) GST refund due of about $4,000. How will this be treated? Surplus Income? Fully or partially withheld by CRA? Again – will the receipt of this increase my reasonable Proposal amount?


One Response to “Retroactive Child Tax Credit lump sum”

A licensed trustee said...

Let’s deal with the Child Tax Benefit first – if you have already filed the proposal and it has been accepted by your creditors and approved by the Court then you are not required to report any retro-active benefit the family may receive – or any other refunds, lottery winnings, bonues from work, etc, etc.

If you are bankruptcy and the family receives a retro-active CTB then it will be treated as income in the month that it is received and therefore be subject to the Surplus Income Rules (the 50% – 75% you refer to in yoru question).

In regards to the New Home GST rebate – if it is payable to you and you owe CRA money for taxes it is likely they will apply your refund to your debt. If it is payable to your spouse then it will be treated the same way as the retro-active CTB. If you are in a proposal it will not matter. If you are bankrupt it will be subject to the Surplus Income rules.

I suggest you review each of these items in detail with you trustee before you file your proposal just to makie sure everyone is aware of what may happen.