Withdrawal of Circular No. 1—Income Tax Returns

The intent of this communication is to advise trustees of the withdrawal of the Canada Revenue Agency’s (CRA) January 1, 1993 directive titled “Processing of Bankrupt Taxpayer Income Tax Returns”. The directive has been in distribution by the Office of the Superintendent of Bankruptcy since January 21, 1993 under Circular No. 1—Income Tax Returns.

As a result of Chapter 36 of the Statutes of Canada, 2007, and revisions to administrative policy in recent years, the directive is no longer an accurate reflection of bankruptcy return processing within CRA. This is particularly true in regards to the handling of post-bankruptcy refunds.

With limited exception, paragraph 67(1)(c) of the Bankruptcy and Insolvency Act identifies the T1 refund for the post-bankruptcy period as being the property of the bankrupt. As such, CRA will ensure that any refund issued in respect of this period is directed to the trustee for the estate of the bankrupt. Since the individual continues to be responsible for the filing of the post-bankruptcy return under paragraph 128(2)(f) of the Income Tax Act and held accountable for any debt that arises from it, any notice of assessment for the post-bankruptcy period that does not involve the issuance of a refund will be directed to the individual rather than the trustee.

In the event that a post-bankruptcy refund has not been issued and the trustee wishes to enquire about the outcome of the assessment, a completed Form T1013 Authorizing or Cancelling a Representative is required. This will grant CRA permission to discuss the details of the assessment with the trustee. Requests for post-bankruptcy assessment information can be sent directly to the appropriate Tax Centre or made by contacting CRA's enquiries line at 1-800-959-8281.

Trustees are encouraged to refer directly to the CRA website or contact the enquiries line at 1-800-959-8281 for additional current information on return processing for bankrupt individuals.