Income Tax Refunds, GST/HST after Bankruptcy Discharge

| Category: What You Keep or Lose
Category: What You Keep or Lose

Question: What Happens with my income tax return or GST or HST Payments? I was lead to believe that I would receive these after my Ontario bankruptcy is discharged, is this true?

Who receives your tax refund depends on the amount of funds in your bankruptcy estate at the end of your bankruptcy.

tax refund after bankruptcyAccording to Rule 59 of the Bankruptcy & Insolvency Act Rules, if there will be enough funds in your estate to pay a divident to your creditors (after the trustee’s fees and expenses are paid), the trustee will return to you any GST/HST received that would otherwise have been distributed to your creditors.

The calculation for each bankruptcy can be complicated and different trustees process HST cheques differently.

In most cases the trustee cannot make this determination until your bankruptcy is over.  When the trustee does their final accounting, they return any excess HST to you.

More information can be found in this article on Do I Lose My HST Rebate When I Declare Bankruptcy in Ontario?