Question: I have a number of debts to rev can, and the province of ontario for a small busines that I had a nember of years ago. Rev can is probably $50K, Ont, is $300K. I can likely cut those in half with appeals, and proper filing, as the bulk of it is penalties for not filing. Is it better to reduce them before filing for bankruptcy? or does it matter?
Answer: In your case, yes, it might matter. If, when you declare bankruptcy in Canada, you owe more than $250,000 in taxes, and if your tax debts represent more than 75% of your total debt, you are not eligible for an automatic discharge from bankruptcy. That means you would be required to go to bankruptcy court, and it would be up to the court to decide how much, if any, of the tax debt you would be required to repay. The court may not make you repay anything, or they might.
So, in your case, ensuring that your tax debt is less than $250,o00 could make your bankruptcy simpler.