How will bankruptcy reform affect tax refunds? Under current law, a person automatically loses his/her tax refund in bankruptcy - for the prior year(s), and the period up to the date of bankruptcy in the year of bankruptcy.
Under proposed changes to section 67(1)(c) of the Bankruptcy & Insolvency Act, which are expected to come into force sometime in 2008, a bankrupt would lose their tax refund in bankruptcy for the entire year of bankruptcy.
Thus if you were to go bankrupt on June 6, 2008, and if the new rules are in force at that time, instead of just losing your tax refund for the period from January 1 to June 5, 2008, you will now lose your tax refund for all of 2008.
We recommend that you contact our Ontario bankruptcy offices for more information on bankruptcy reform and tax refunds in bankruptcy.
Our bankruptcy offices in Ontario
Contact a bankruptcy trustee
About bankruptcy trustees at Hoyes Michalos