Words and Phrases - "bankrupt"
10 October 2007 External T.I. 2007-0243601E5 F - Proposal - Taxation year end
Regarding a corporation that had submitted a proposal under the Bankruptcy and Insolvency Act ("BIA") that was accepted by the creditors, and homologated by the Superior Court, with each creditor being paid according to the terms of the proposal, CRA stated:
Section 2 of the BIA specifically states in the definition of "insolvent person" that such a person is not bankrupt. Accordingly … Opco is not a bankrupt corporation for the purposes of subsection 128(1).
CRA went on to note that it had appealed the Marchessault Tax Court decision (subsequently reversed by Marchessault (FCA).
Canada v. Marchessault, 2008 DTC 6496, 2007 FCA 345
The deemed year end under s. 128(2)(d) of the Act applied only to a "bankrupt" as specifically described in s. 2 of the Bankruptcy and Insolvency Act (the "BIA"), and did not extend to an individual (such as the taxpayer in this case) who had made a proposal notwithstanding the statement in s. 66(1) of the BIA that the provisions of the BIA would apply "with such modifications as the circumstances require" to proposals. Trudel J.A. noted (at para. 67) that Parliament had "exactly identified" the definition of "bankrupt" in the BIA and that "Parliament did not refer to the law applicable to a bankrupt under the BIA".
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | CRA positions not conclusive | 51 |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | related interpretation provision not referenced | 112 |