Bankruptcy, COVID-19 and GST Credit

Published by Mike Wright on

How Does my Bankruptcy Affect the Special Goods and Services Tax (GST)
Credit Payment in April 2020 to Offset the Impact of the COVID-19 Coronavirus?

Starting April 9, a one-time special payment is being provided by the federal government through the Goods and Services Tax credit to assist low- and modest-income individuals and families with the financial impacts of the COVID-19 coronavirus.

  • The average additional benefit will be close to $400 for single individuals and close to $600 for couples.

  • There is no need to apply for this payment. If you are eligible, you will get it automatically.

However, during bankruptcy, GST credits are paid to the Licensed Insolvency Trustee (“LIT”) and not to the individual or family who would receive it if not for the bankruptcy.

Except, the Office of the Superintendent of Bankruptcy (“OSB”) issued guidance to LITs entitled OSB Temporary Guidance March 30: COVID-19:

“Keeping in mind the intention of the Government of Canada in introducing the COVID-19 Emergency Response Act, the OSB strongly encourages LITs to allow debtors to keep increases in GST/HST payments they receive pursuant to the COVID-19 Emergency Response Act, in spite of Rule 59 which may permit LITs to accept such amounts for fees and where no dividend is payable to creditors.”

In keeping with the OSB’s guidance, we have adopted the following treatment for the April 2020 Goods and Services Tax (GST) credit payments:​

  • The regular quarterly GST payment issued April 3, 2020, was received in our offices on April 9, 2020, and will be retained in the estate trust account or refunded to the bankrupt individual or family in accordance with the regular rules found in s. 67(1)(b.1) of the Bankruptcy and Insolvency Act and s. 59 of the Bankruptcy and Insolvency General Rules.

  • The one-time special GST payment issued April 9, 2020, to mitigate the financial impacts of the COVID-19 coronavirus was received in our offices on April 16, 2020, and was mailed to the bankrupt individual or family on April 17, 2020.

To answer your questions about how bankruptcy is affected by the rapidly changing economic conditions, and to support you through any personal financial challenges you may be facing, we’ll be hosting regular online office hours. During these online Q&A sessions, there’s no agenda except to address your concerns and answer your bankruptcy questions.

To join, click:

Download the free RingCentral Meetings app.

The Next Online Bankruptcy Q&A Session is Scheduled for:

Friday, April 24, 2020 – 12:00 – 1:00 pm PDT

We’re here to help, and we look forward to “seeing” you online to provide answers to all your financial questions. We have faith in our public health care system, our federal and provincial governments, and the strength of the Canadian economy and our financial institutions. Together we will get through this.