Question
I have been self-employed for the last three years, and have not made any tax payments on my income and have not filed my tax returns. Revenue Canada has seized my bank account and has sent a notice for me to file my returns. I have made around $100,000.00 in each of the last three years and I know I owe a lot of money. Can I go bankrupt for Revenue Canada?
Answer
Generally speaking, yes. Personal Income Taxes, unless they are related to fraud or falsified tax returns, are dischargeable in a bankruptcy. If you are a repeat bankrupt, and your previous bankruptcy or bankruptcies were tax-related, Revenue Canada may object to your discharge and ask the Court for you to make some restitution or payments before you are discharged from bankruptcy. There are exceptions and it largely depends on the specifics of your situation. Most people who go bankrupt do not have to pay their personal tax debts, if they file and pay their taxes from the date of bankruptcy forward, and are tax compliant while bankrupt.