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Guelph Bankruptcy Trustee Testifies in Ottawa – Part 2
Last week I described our testimony before the Senate Banking Committee on student loans and bankruptcy in Guelph. The second part of our oral testimony dealt with our perceptions of how the Canada Revenue Agency may deal with the changes proposed to the Bankruptcy & Insolvency Act.
We noted that there is going to be an automatic opposition section to the Act for persons with large tax debts. Opposition is the term that is used when an individual is required to appear in Court and explain the circumstances that caused their bankruptcy to a Registrar or Master.
Under current legislation, any creditor may request such a review. Under the new law it will be automatic for Canada Revenue. Our concern is that while the threshold for this automatic provision is $200,000 we suspect that the government will petition to have that threshold lowered in future amendments to $100,000 or even $50,000. No other creditor is being afforded this special treatment and frankly, we’re concerned where this may lead.
Our greatest concern with the Canada Revenue Agency is in the area of proposals to creditors. The current policy of the government is to request 100% repayment of the basic tax debt when a person files a proposal – this means that the government votes against many reasonable repayment plans.
As the law sits today, if a proposal is rejected a person is likely to become bankrupt and then be subject to the surplus income rules for a period of 9 months or longer. The new law imposes the surplus income rules for 21 to 36 months – extending the repayment and therefore rewarding the Canada Revenue Agency for rejecting the proposal.
We strongly encouraged the Senate to request the Minister of Revenue to appear and explain his agencies position in this regard.
Following our presentation the Senators present directed questions to Douglas Hoyes and I for the better part of an hour. The questions showed an excellent understanding of the issues and we were pleased with the Senators level of knowledge and interest in the subject.
We believe the experience was well worth the drive (even in a blizzard) and we are confident the Senators will put the information we provided to good use.
If you are thinking about filing bankruptcy in Guelph, you now have access to the same experts the government of Canada has called on for expert testimony. Give my Guelph Bankruptcy Office a call at 519-823-0330 or e-mail me your questions, and I will set up a meeting in our Guelph office where we can discuss your options and help you resolve your financial problems.