Bankruptcy GST credit payments are retained by the trustee only if they are necessary to cover trustee’s fees. GST credit payments are based on the filing of the person’s tax returns. For example, the 2016 tax return payments are made from July 2017 to June 2018.
Trustees are entitled to keep tax refunds (and bankruptcy GST credit payments, if applicable) for tax returns as follows:
- Outstanding as at the date of bankruptcy;
- For the period from January 1st to the date of bankruptcy (the pre bankruptcy tax return); and
- For the period from the date of bankruptcy to December 31st (the post bankruptcy tax return).
The trustee should inform debtors at the outset of a file that their GST cheques may be retained by the trustee if required to cover fees even after the bankrupt’s discharge.