Do Income Taxes Owed To CRA Get Written Off In Personal Bankruptcy?

2012-11-29

Yes, they are released in a bankruptcy, or consumer proposal for that matter.

Many people are confused about this issue primarily, I think, because they have read websites relating to bankruptcy proceedings in the USA where income tax debts are generally not released. In Canada all debts that a person owes are released in a bankruptcy with the exception of a very few specifically listed types of debts (alimony and child support, fines and penalties imposed by a court etc.). Income tax (and generally debts due to the government) are not specifically listed and they ARE therefore released.

I should also note that there is no authority under the Income Tax Act for CRA to settle a debt for some lessor amount but we can, and do, settle debts owing to CRA through Consumer Proposals Frequently. Please do not hesitate to call me at 306-790-7904 if you would like further information or wish to discuss.

Latest Blog Posts

2025-07-11

How to prepare for your mortgage renewal in a high-rate environment

Joey Zanni

With rates still elevated, Canadians renewing mortgages face tough choices. Here’s how to prepare. 

Read More

2025-07-11

Unexpected summer expenses

Vicky Samuels

From camps to lawn care, summer costs can add up fast. Learn how to plan ahead and avoid seasonal surprises before they catch you off guard.

Read More

2025-07-08

Parents’ budgeting tips: Five ways to help you save

Alternatives to Bankruptcy Bankruptcy

If you sit down with your parents, they might have a lot of valuable pieces of advice to help you save money. These five tips can help you build a budget. 

Read More

Consultation icon