A bankrupt chiropractor applied for discharge from bankruptcy arising primarily from large personal income tax liabilities exceeding $200,000.
The Canada Revenue Agency, the trustee, and the Office of the Superintendent of Bankruptcy opposed discharge, alleging improper asset transfers, inaccurate disclosures, and failure to make reasonable efforts to pay tax debts.
The court found that the bankruptcy was tax-driven under s. 172.1 of the Bankruptcy and Insolvency Act and that the bankrupt had transferred assets to his spouse at artificially low values and failed to disclose significant transactions, including RRSP withdrawals and property transfers.
The court also determined that the bankrupt’s reported income was artificially low and imputed a higher income based on professional capacity.
Balancing the statutory factors and the need to maintain the integrity of the bankruptcy system, the court granted a conditional discharge requiring substantial payments and further financial disclosure.