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Debra, Lawyer
Category: Canada Law
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Experience:  Lawyer
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I filed bankruptcy in 2013 in ontario canada. After 9 months

Customer Question

I filed bankruptcy in 2013 in ontario canada. After 9 months I received automatic discharge. Canada revenue agency is reassessing me for 2012 and want me to pay tax on a property I sold before filing for bankruptcy. Am I liable to pay or my bankruptcy has it covered?
Submitted: 1 year ago.
Category: Canada Law
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call + Review Legal Documents. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 1 year ago.
Is the reason important as to why I failed to report the gain why I filed taxes in 2013 for the year 2012
Expert:  margot1969 replied 1 year ago.

Hi, I am sorry for the trouble. Seem's like nothing is ever done-even in bankruptcy. The general rule of thumb is that taxes are not dischargeable in bankruptcy. That is the simple answer. The rules can be complicated depending on your circumstances but usually taxes stay with you. On your discharge there should be some details and orders from the court ordering certain debts to be discharged. Was the tax included as liability on the original filing? If not then the tax would not have been included in the bankruptcy. If it was included have you advised the tax service and have you simply advised that you have dischargeable debt and you believe the tax to be part? I don't see any harm in disputing the assessment yourself. Even if the tax is viable, you may be able to negotiate an accommodation to reduce the tax if it is still payable. Good luck, Sean

Expert:  margot1969 replied 1 year ago.

Please let me know if there are any documents to review on this one as well. Best, Sean

Customer: replied 1 year ago.
When I filed for bankruptcy my trustee did put CRA as a creditor, the amount was put down as one dollar, at the time of filing for bankruptcy I didn't owe any thing but since CRA might reassess me xyz dollars can the amount owed be written off now as I declared CRA as a creditor back in 2013 at the time of declaring bankruptcy even though I didn't owe them as I forgot to mention capital gain in my taxes
Expert:  margot1969 replied 1 year ago.

Probably not-the government taxes are not usually dischargeable even in bankruptcy. The government usually insists on pound of flesh even if no meat is left on the bones.

Customer: replied 1 year ago.
I disagree with you. A simple Google search revealed case law, articles stating tax debt is exguinshed.
Expert:  margot1969 replied 1 year ago.

That's great then-good luck. Don't forget to pull cases and cite to them when you oppose the assessment. Good luck

Expert:  Debra replied 1 year ago.

You can generally wipe out debts to the CRA so long as you are not considered to have acted fraudulently. For example, if you transferred assets to another person not at arm's length to avoid creditors that would be considered fraud.

As well, in most cases if you have been charged with an offence relating to taxes then a bankruptcy will not help.

But if that is not what happened in your case and it doesn't seem that it was then your debts should have been wiped out by the bankruptcy.

Customer: replied 1 year ago.
Can you tell me some case laws that could be relevant to my scenario?
Expert:  Debra replied 1 year ago.

It is not about case law which I cannot provide but it is about the Bankruptcy Act and there is nothing in the Act that says tax debts are not covered.

There are specific provisions that do exempt some debts. For example, support arrears are not wiped out by a bankruptcy.

But debts to the CRA generally are.

Customer: replied 1 year ago.
Sir can you help me with this one, I wrote a letter to CRA where I told them I bought a property with intention of profit. They want to assess me on the basis of business income just because I used the word profit in my written submission. When I used the word profit I actually meant to say profit from rental income, how can I correct the written submission legally?
Expert:  Debra replied 1 year ago.

Please start a new post for this new question.