CRA announces that it will accept the deferral of payments under a Bankruptcy proposal until September 1, 2020
S. 60(1.1) of the Bankruptcy and Insolvency Act effectively provides that unless Her Majesty consents, any court-approved proposal must provide for the payment of listed categories of amounts including those that could be subject to a demand under ITA s. 224(1.2) (i.e., source deductions). BIA s. 62.1(b)(ii) provides for waiver by the creditors of default in the performance of a proposal.
After acknowledging the COVID-19 outbreak, CRA announced:
The CRA is proposing a solution to assist taxpayers and LITs [Licensed Insolvency Trustees] in circumstances where the CRA is the majority creditor and the debtor is experiencing financial hardship.
For proposals filed under Division 1 of the … BIA … the CRA is offering a waiver of the default pursuant to section 62.1 of the BIA and granting a deferral of payments to the estate up to September 1, 2020. This will also apply to any amounts subject to section 60(1.1) of the BIA as per our existing Administrative Agreement policy with LITs.
For consumer proposals under the BIA, the CRA offers the acceptance of an amended proposal that calls for a deferral of payments up to September 1, 2020.
Neal Armstrong. Summaries of Pending Default of a Proposal under the BIA where the Canada Revenue Agency is a majority creditor: April 23, 2020 OSB Webpage under BIA s. 62.1(b)(ii) and ITA s. 224(1.2).