Business numbers and GST/HST returns for bankrupt sole proprietors outside of the Quebec region

Notices to Licensed Insolvency Trustees from the Canada Revenue Agency

December 6, 2022

The business number and the GST/HST account of bankrupt sole proprietors commonly remain available for use by the Licensed Insolvency Trustee (LIT) during the administration of the bankruptcy estate. Sole proprietors can mistakenly use the bankrupt business number to submit GST/HST returns and remittances for commercial activity that is after their date of bankruptcy. This can cause conflicts with the GST/HST returns being filed by the LIT.

The Excise Tax Act stipulates that if the person engages in commercial activities that are not related to their bankruptcy, they are considered as activities of a separate person. In acknowledgement of this separation, the person is allowed to apply for, and be granted, a new business number.

The CRA would like to encourage LITs to inform bankrupt sole proprietors to apply for a new business number if they plan to engage in commercial activity after their date of bankruptcy.

GST/HST returns

As of January 1, 2023, the Canada Revenue Agency (CRA) will be implementing a new process for handling GST/HST returns submitted for a bankrupt sole proprietorship.

When a GST/HST return is received for a bankrupt sole proprietorship, CRA will communicate with the LIT to confirm that the return was submitted by the LIT.

The CRA will not need to contact the LIT in the following situations:

  • Before filing the GST/HST returns:
    1. The LIT sent a message through the Represent a Client portal advising CRA of the periods for which returns will be filed.
    2. The LIT calls the business enquiries line at 1-800-959-5525 and informs CRA of the period for which returns will be filed.
  • When submitting GST/HST returns by paper:
    1. The LIT includes information identifying them as a LIT, such as a document with their firm’s letterhead.

When the return was not submitted by the LIT, CRA will contact the sole proprietor to have them register a new business number.

If you encounter any issues or have any concerns, please contact the CRA at 1-800-959-5525.