Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a statement of account could be provided to a bankrupt taxpayer?
Position: Yes.
Reasons: A statement of account contains taxpayer information, defined in subsection 241(10), as information of any kind and in any form prepared from information obtained by or on behalf of the Minister for the purposes of the Act. Under subsection 241(5), taxpayer information may be disclosed to a taxpayer, if it concerns that taxpayer.
September 27, 2011
Individual Returns Directorate HEADQUARTERS
Income Tax Rulings
Directorate
Attention: Pamela McCarthy, Manager Sam Kim
T1/T3 Accounting Enquiries Section (705) 721-5199
2010-038528
Providing a Statement of Account to a Bankrupt
This is in reply to a request from Valorie Bunce for a technical interpretation regarding the disclosure to a discharged bankrupt taxpayer of a detailed statement of account for the pre-bankruptcy and in-bankruptcy periods. As explained below, such information may be provided.
Under subsection 241(10) of the Income Tax Act (the "Act"), "taxpayer information" is defined as information of any kind and in any form, prepared from information obtained by or on behalf of the Minister. On the other hand, "taxpayer information" does not include information that does not, directly or indirectly, reveal the identity of the taxpayer to whom it relates.
A Statement of Account is derived from accounting records prepared and maintained by the Minister, and is compiled from information obtained from or about a taxpayer. It follows, then, that such a statement contains taxpayer information. If a taxpayer requests taxpayer information about himself, pursuant to subsection 241(5), such may be provided to that taxpayer. Accordingly, a detailed Statement of Account may be provided to a taxpayer, whether bankrupt or otherwise.
Typically, a Statement of Account contains information of all financial transactions that occurred chronologically on an account. It displays an accumulative and final account balance, and includes details on assessments, payments, refunds, interest adjustments and cancellations, set-offs, and credit transfers between tax years or other accounts. Furthermore, it can include transactions that occurred during a taxpayer's bankruptcy.
Unless a summary of any pre-bankruptcy losses is included, a Statement of Account may have marginal value to a discharged bankrupt taxpayer. Under paragraph 128(2)(e), losses are only deductible by the trustee. However, information regarding the balance of unused allowable business investment losses would be useful to the taxpayer for the purpose of determining the lifetime capital gains deduction under section 110.6.
Subsection 39(9) provides that the realisation of allowable investment losses reduces the amount of the lifetime capital gains exemption. Paragraphs 128(2)(f) and (g) preclude a taxpayer from applying pre-bankruptcy allowable business investment losses to reduce post-bankruptcy income. However, paragraph 128(2)(i) deems the unused amount not to have been allowable business investment losses for the purpose of claiming the capital gains exemption in any subsequent year.
In closing, a Statement of Account would be of interest to a discharged taxpayer to the extent that it would show the amount of the allowable business investment loss applied by the trustee and the balance of the lifetime capital gains exemption that was reduced by that application.
Should you have any questions or require additional information, please do not hesitate to contact Sam Kim at the number provided at the outset of this memorandum.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Income Tax Rulings Directorate
c.c. Valorie Bunce
T1/T3 Accounting Enquiries Section
Individual Returns Directorate
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