Subsection 128(1) - Where corporation bankrupt
Administrative Policy
24 July 2013 T.I. 2012-0455801E5 - Trustee in bankruptcy
The Act does not define what "property of the bankrupt in the trustee's possession" means. Instead, the BIA provides that what is comprised [sic] in the property of the bankrupt, with certain exceptions.
Income Tax Technical News, No. 8, 30 September 1996 "Bankrupt Corporation - Change of Fiscal Period"
A Corporation that becomes a bankrupt must obtain approval to change its fiscal period.
25 July 1995 T.I. 950949 (C.T.O. "Fiscal Period of a Bankrupt Corp")
The fiscal period of a corporation would not be affected by its bankruptcy, notwithstanding that s. 128(1)(d) deems its taxation year to have ended on the day immediately before the day in which it becomes bankrupt and deems the new taxation year to have commenced on the day of bankruptcy.
16 January 1992 T.I. (Tax Window, No. 15, p. 10, ¶1703)
The annulment of the bankruptcy under s. 61(1) or 181(1) of the Bankruptcy Act is not retroactive and, therefore, does not invalidate the application of the rules in s. 128 for the period prior to the annulment.
10 December 1990 TI (Tax Window, Prelim. No. 2, p. 20, ¶1065)
An annulment of a bankruptcy does not invalidate the application of s. 128 for the period commencing on the date the taxpayer became bankrupt and ending on the date of the annulment.
10 September 1990 Memorandum (Tax Window, Prelim. No. 1, p. 8, ¶1010)
Discussion of fiscal period issues respecting a bankrupt cash-basis farmer.
Subsection 128(2) - Where individual bankrupt
Cases
The Queen 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".
See Also
Sinnott v. The Queen, 2000 DTC 2459, Docket: 1999-1708-IT-G (TCC)
Because the trustee in bankruptcy of an undischarged bankrupt was that individual's agent, the sending of a notice of assessment to the trustee satisfied the obligation to provide notice of the assessment to the individual in respect of a separate return the individual had filed under s. 128(2)(f).
Administrative Policy
16 May 1994 Memorandum 940229 (C.T.O. "RRSP Withdrawal by Trustee of an Insolvent Person")
Where an RRSP vests in the trustee under a proposal filed by an insolvent person under Part III of the Bankruptcy and Insolvency Act, s. 128(2) will not apply because the definition of "bankrupt" does not include an insolvent person or a trust created for the purpose of settling the debts of an insolvent person. In particular, where there is an assignment or transfer of the RRSP to the trustee, s. 128(2)(a) (which otherwise would deem the trustee to be an agent of the individual) will not apply, with the result that s. 146(2)(c) will require the inclusion in the individual's income of the fair market value of the property in the RRSP.
Subsection 128(3)
See Also
Egard v. The Queen, 94 DTC 1232 (TCC)
A "bankrupt" does not include a person making a proposal. Accordingly, the taxpayer was not entitled to file returns on the basis that a new taxation year commenced on the day he filed a proposal.