How is a Disability Tax Credit handled?

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How is a Disability Tax Credit handled?How is a Disability Tax Credit handled?

I filed for bankruptcy in 2011 and was discharged after the 21 month period in September 2013.

after I was discharged my son was approved for the disability tax credit, and the trustee agreed to split the refund for prior years with me 50:50.

this year, my wife was also approved for disability credit dating back to 2006.  I asked the trustee to file an adjustment again with CRA to claim all unused credits for the years 2006-2011 and the trustee agreed to a 50:50 split again.

several months later, the CRA finally sent a cheque to my trustee for approx. $9,000, of which my split would be about $4,500.

However, during the time I was waiting for CRA to do the adjustments my wife took time off work ( at her doctors’ request ) and has now been off for over 2 months.

This obviously has had a financial impact which was magnified by the fact that her insurance denied her any benefits due to a pre-existing condition.

I contacted my trustee (indirectly), and the person I am in contact with tells me that the trustee always does a 50% split, and that’s it.

I’ve clearly stated to this person that I am simply wondering if there is any chance of me receiving the entire refund of $9,000 to help me and my family through this time while my wife is on leave.

In a nutshell, I’ve asked them if I can have the entire refund due to our current financial struggles, and I am not really getting a straight answer.

So my question is, can a trustee choose to give me the entire refund based on my situation or am I beating a dead horse?

Also, they told me today that my cheque for 50% has already been cut and signed, and the other 50% has already been reported to the superintendent of bankruptcy, and last but not least… the trustee is gone for 2 weeks on vacation.

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My reading of the Bankruptcy and Insolvency Act indicates that all Disability Tax Credits (DTC) vest in the Trustee as follows:

Note that the last sentence summarises this issue:
“Therefore, if it can be determined that the DTC relates to the year of bankruptcy or a prior year, it will vest with the trustee.”

“67. (1) {Property of bankrupt} the property of a bankrupt divisible among his creditors…shall comprise

(c) all property wherever situated of the bankrupt at the date of the bankruptcy or that may be acquired by or devolve on the bankrupt before their discharge, including any refund owing to the bankrupt under the Income Tax Act in respect of the calendar year — or the fiscal year of the bankrupt if it is different from the calendar year — in which the bankrupt became a bankrupt, except the portion that

is not subject to the operation of this Act, or
in the case of a bankrupt who is the judgment debtor named in a garnishee summons served on Her Majesty under the Family Orders and Agreements Enforcement Assistance Act, is the garnishable money that is payable to the bankrupt and is to be paid under the garnishee summons, …

This new section clearly indicates that for the bankrupt’s tax refund for the calendar year the assignment is filed, it is an asset that vests with the trustee unless one of the two exceptions outlined in BIA ss. 67(1)(c) (i) or (ii) exists. Currently, section 118.3 of the ITA does not indicate that the DTC is not subject to the operation of the BIA.Footnote 2 Therefore, if it can be determined that the DTC relates to the year of bankruptcy or a prior year, it will vest with the trustee.”

You may ask the Office of the Superintendent of Bankruptcy to adjudicate this:


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