The Office of the Superintendent of Bankruptcy (OSB) has published a Position Paper that provides clarity on the treatment of the one-time grant for guaranteed income supplement in an insolvency proceeding.
The OSB’s position is that the Bankruptcy and Insolvency Act (BIA) requires the consistent treatment of the one-time grant for guaranteed income supplement in insolvency proceedings. Paragraph 67(1)(b) of the BIA has the effect of excluding exempt property from property divisible among the creditors. Since the one-time grant for guaranteed income supplement is exempt, it is not property divisible among the creditors. However, it should be included in the surplus income calculation as per section 68 of the BIA since the benefit falls under the definition of total income. LITs should follow example 5 of of Directive No. 11R2-2022R, to properly assess the amount to be attributed to the bankruptcy.
For details, please read the position paper on the OSB’s website: