2016 Income Tax Season
Ensuring that your tax returns are filed on time is an essential part of the Rebuilding process. The year in which a person seeks Relief from their creditors by way of protection under the Bankruptcy and Insolvency Act is divided into two:
- The period from January 1, 2016 until the date of your bankruptcy (“PRE-BANKRUPTCY”); AND
- The period from the date of bankruptcy until December 31, 2016 (“POST-BANKRUPTCY”).
Part of A.Farber & Partners’ service to you includes the filing of your 2016 pre and post-bankruptcy income tax returns with the Canada Revenue Agency ("CRA"). We have prepared a list of the most commonly asked questions to assist you through this process, and particularly draw your attention to the section on self-employed situations:
Income Tax Questions
Do I need to make an appointment to get my taxes prepared?
Tax return preparation is NOT done by in-person appointment. All you need to do is complete the “Income Tax Data Form” which will be sent to you by mail in mid-January (or click here to download), and return it to our tax department, along with all required forms, slips and receipts. We will prepare your returns and submit them directly to the CRA Tax Centre on your behalf.
Is there a fee charged to prepare my tax returns?
There is no charge for this service. It is included as part of your bankruptcy.
My spouse and I always get our taxes done together. Will you be preparing my spouse’s tax return also?
We only file tax returns for individuals who filed an assignment in bankruptcy, for the year of bankruptcy, and the preceding year if necessary. Your spouse will need to have their tax return filed separately.
I don’t have my T4 slips yet, and the deadline in your letter is approaching. What should I do?
While we do encourage all clients to get their tax information submitted as soon as possible, there is a high risk of incorrect tax filing if your complete tax information is not submitted! Please wait until you have all your documents before submitting your information to the tax department. You may need to follow-up with your employer(s), bank, etc.
Will I receive copies of the completed tax returns?
If the tax department determines that your post-bankruptcy tax return results in a balance owing to the CRA, you will promptly receive a copy of this return along with a letter instructing where and when to send your payment to the CRA. In all other instances, copies of your completed tax returns are available upon request. However, we do ask that unless your need for copies is an URGENT matter, please defer your request for copies until after the April 30th filing deadline so that the Tax Department can focus on getting all tax returns filed.
What happens to any tax refunds that I am entitled to?
Any refunds for the year of bankruptcy, and for any preceding years, are assets in a bankruptcy. The CRA issues the payment of such tax refunds for deposit to the trust account the Trustee maintains for the benefit of your creditors. Your 2017 (and forward) tax refunds will come directly to you from CRA.
Will I receive the notices of assessment from CRA?
The CRA will send the pre-bankruptcy assessment notice to the trustee in all cases. If your post-bankruptcy return results in a refund, the trustee will receive this assessment notice also. However, if your post-bankruptcy return results in a zero balance, or a balance owing to the CRA, you will receive the post assessment notice directly from the CRA. Copies of any assessment notices sent to the trustee are available upon request from our tax department.
What if I really want my own accountant to prepare my taxes?
If your accountant has expertise to prepare your pre and post-bankruptcy tax returns, you can choose to have them do so. However, please be aware that the trustee is not responsible for any accounting fees charged, or for any errors made by your accountant. It is also essential that copies of the returns filed be provided to our tax department as verification that your tax-related duties in your bankruptcy have been fulfilled.
What information and/or documents do you need to prepare my tax returns?
The trustee will need the Income Tax Data Form, which will have been mailed in our letter dated January 15, 2017, (click here to download), completed with information regarding your spouse, any dependents, property tax or rent paid, tax deductible support payments, all tax slips issued to you, and any claimable receipts. A comprehensive list of documents is published at the bottom of the Income Tax Data Form.
How do I send you my tax information?
- by fax to (647) 796-6000 (marked: "attention: TAX"),
- by regular mail to: A. Farber & Partners Inc., 300-1220 Sheppard Avenue East, North York, ON, M2K 2S5. If you send your information by mail, please ensure you keep copies of all tax slips and documents in the event that your envelope gets lost by Canada Post.
- If you prefer, you can also bring your tax information in person to one of our offices. Please do NOT leave envelopes after hours – your tax information is private, and for your own security, we suggest you only leave your documents with Reception at the following offices:
- North York – 300-1220- Sheppard Avenue East, Toronto
- Downtown Toronto – 1600- 150 York Street, Toronto
- Oshawa – 207 – 200 Bond Street West, Oshawa
- Barrie –93 Dunlop St East, Suite 302 Barrie, L4M 1A8
- Peterborough - 303-159 King Street, Peterborough
- Hamilton –1051 Upper James St., Suite #207, Hamilton L9C 3A6
- Burlington - 204 – 3390 South Service Road, Burlington
I am self-employed. Is there any difference in how my taxes are prepared?
Self-employed individuals are better served by having their own accountant file their post-bankruptcy return, because they would be familiar with specifics related to your business, such as expenses, asset depreciation and the like. However, the trustee does need to ensure that the pre-bankruptcy is filed, either by preparing the return or by receiving a copy of the completed pre-bankruptcy return. Your accountant would then proceed to file your 2016 post-bankruptcy return. We have a list of guidelines which may be a useful tool for preparing an accurate post-bankruptcy tax return – click here to review this information.
I filed for bankruptcy in 2015, and A.Farber prepared my taxes for that year. However, I was discharged during 2016. Does this mean that the trustee needs to also file my 2016 tax return ?
No. You must file your own returns for 2016. Any resulting refund belongs to you. Any balance owing is your responsibility to pay to the CRA. It is a normal tax return in all respects other than that it will need to be paper-filed. CRA will not accept e-filed tax returns until trustee’s discharge, which is typically 1.5 – 2 years after your discharge.