September 9th, 2008 by Questions
I am currently preparing my tax returns for the years ending 2000 to 2007 which I did not previously file to CRA. Based on the T1 returns that I have prepared, I owe approximately a total of $50,000. This amount does not include penalties and interest. Futhermore, I have not filed my GST return and I estimate I owe $20,000 in GST. Do I need to wait for the CRA`s notice of assessment for these years before I file for bankruptcy in order to provide the trustee with an accurate amount of how much CRA debt is owing? It will no doubt take CRA some time to assess the tax returns, so what happens if CRA subsequently assesses my tax obligation to be double or even triple the amount I have filed? How will this affect the bankruptcy if I file for bankruptcy with the assumption that I only owe $50,000 prior to receiving the CRA`s assessment (which could be more than the $50,000 initially claimed).
Posted from: Ontario
One Response to “CRA debts”
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September 10, 2008 at 8:11 am, A licensed trustee said:
You are not required to file all of these outstanding tax returns before you file for bankruptcy, but in my opinion it is a good idea to do so.
The law requires you to file the year before you file for bankruptcy and the year of your bankruptcy in ordr for you to be eligible to be discharged (ie to complete the bankrutpcy). As silly as this may seem, even though the law doesn’t require it, CRA will ask your trustee to have you complete all of those other returns too – so you may as well get them done.
The fact that they are assessed after you file and whether or not they charge interest and penalties (they will) doesn’t matter – the tax debt will be included in your bankruptcy and eliminated once your bankruptcy is done.