Newfoundland and Labrador Seniors' Benefit

The Province of Newfoundland and Labrador announced enhancements to the Seniors' Benefit in its 2008 Budget. These enhancements affect single seniors who are at least 65 years of age with net incomes up to a maximum of $31 930, bringing benefit amounts for singles more in line with those paid to married seniors. The benefit is paid automatically each October to both married and single low-income seniors. Although not a new tax credit, the Office of the Superintendent of Bankruptcy has nevertheless now been asked for its formal position regarding the nature of these benefits in the context of bankruptcy.

Under subsection 34(8) of the Newfoundland and Labrador Income Tax Act, the Seniors' Benefit is to be included in a bankrupt individual's pre-bankruptcy taxation year, which begins on January 1 and ends on the date of bankruptcy. By virtue of its nature as a tax credit, this benefit is not considered to be an overpayment of taxes based on the individual's income. In other words, because no monies were deducted from the individual's income prior to bankruptcy, any benefit received should not be governed by section 68 of the Bankruptcy and Insolvency Act (BIA). Consequently, the benefits would fall under section 67 of the BIA as property of the bankrupt divisible among the creditors. Furthermore, there are no statutory provisions or regulations that would render the benefit exempt from seizure or execution.