Personal Bankruptcy and Filing Late Tax Returns
Late Tax Returns & Bankruptcy in Canada
Filing for personal bankruptcy in Canada isn’t a straightforward process in which you have unsecured debts discharged from your record.
It is a significant legal procedure that impacts your financial status and prospect for several years.
Consequently, you will need to satisfy several requirements before entering the bankruptcy procedure.
For many individuals, the most daunting prospect relates to filing late tax returns.
Filing Late Tax Returns: A More Common Issue Than You’d Think
Despite the fact that encountering problems with the taxman is one of the worst financial mistakes you could make, it’s a situation that many financially troubled individuals find themselves in.
When falling deeper and deeper into the sea of debt, completing a tax return is probably the last thing on your mind.
The correlation between money worries and incomplete tax returns cannot be attributed to coincidence.
There are several reasons why you may have failed to complete your tax returns, including but not limited to:
- You were worried about owing money to the government when you couldn’t afford to make the repayments;
- Being unaware that help was available;
- You lost, or misplaced tax receipts and information slips;
- The tax return process intimidated you, especially as you had no funds for an accountant.
It is not uncommon for individuals to let their tax returns remain incomplete for several years.
Regardless of the reasons behind this situation, or the length of time involved, it’s vital that you bring the tax returns up to date ASAP.
How To Bring Your Tax Returns Up To Date
Filing your tax returns doesn’t only serve to ensure that you’re permitted to file for bankruptcy.
It can also support your future financial situation in a variety of ways, including but not limited to:
- If taxes are owed on the tax returns, they are covered by the bankruptcy, which brings a better long-term result for your financial health;
- If rebates are due on tax returns, they are added to the bankruptcy estate before being distributed to the unsecured creditors;
- Should you be eligible for disability credits and GSTs during the post-bankruptcy period, the tax return completion will make this clear.
Filing tax returns can bring immediate and long-term financial rewards while, crucially, providing the peace of mind that you deserve.
However, you must find the right approach to bring your tax returns up to date before filing for bankruptcy.
A trusted Trustee is the answer.
A Trustee can secure tax receipts and related information from the Canada Revenue Agency (CRA), complete your Income Tax Returns for the year prior to the bankruptcy, and file the pre-bankruptcy tax return for the period between January 1 and the date of filing for bankruptcy.
In cases where tax returns for multiple years are needed, this must be completed too.
Once the tax return issues have been settled, the next steps will be dictated by the findings.
Either way, the Bankruptcy Canada team can support you through every step of the process.
Get the tax return procedures running today by calling (877) 879-4770 today.