Income Tax Filing in the Case of a Bankruptcy
Since you have to file two income tax returns for the year of the bankruptcy, you need to know which return to use to claim any deductions and tax credits and how to calculate them.
For more information, see the tables in document IN-114-V, Bankruptcy.
You can claim any of the following tax credits in your income tax return for the period after the bankruptcy, taking into account your income for the whole year, as though you had not declared bankruptcy:
- the age amount, amount for a person living alone and amount for retirement income;
- the amount for medical expenses;
- the tax credit for recent graduates working in remote resource regions.
You can claim the solidarity tax credit in your income tax return for the period after the bankruptcy, using only your income for that period.
You can claim the home buyers' tax credit in the return for the period in which you purchased the qualifying home (either before or after the bankruptcy). The amount claimed cannot be more than the amount you could have claimed had you not declared bankruptcy.
You cannot claim a tax credit in the return for the period after the bankruptcy or in a future return for the following amounts paid before the bankruptcy:
- tuition or examination fees;
- interest on a student loan;
- charitable donations.
You cannot claim the tax credit for tuition or examination fees:
- in the returns for the period beginning on the date of the bankruptcy and ending on the date of your discharge from bankruptcy;
- in a return for a future year for the amounts paid in that period.
Enter advance payments of the following tax credits in the return for the period after the bankruptcy:
If you made instalment payments in the year of bankruptcy, enter them in the return for the period in which they were made (either before or after the bankruptcy).
You cannot deduct or carry forward an unused capital loss or non-capital loss sustained before the bankruptcy in the return for the period after the bankruptcy.
In addition, you cannot claim the alternative minimum tax carry-over relating to a year before the bankruptcy or the carry-over of the adjustment of investment expenses in the return for the period after the bankruptcy or for a future year.