Alberta Resource Rebates
On , Bill 43, entitled the Alberta Resource Rebate Statutes Amendment Act (ARRSAA) received Royal Assent in the Alberta Legislature, paving the way for a one-time rebate to be paid to nearly all Albertans resident in Alberta on who had filed a 2004 tax return. The refunds were announced in response to a larger-than-expected surplus in that province, generated mostly by high energy revenues. The majority of the rebate cheques should be sent out in late January 2006.
The announcement of the $400-per-person rebate program has prompted enquiries from trustees who wish to know how these monies should be treated in a bankruptcy context. Are these monies seizable by the trustee or exempt, or are they to be considered income for the purposes of calculating surplus income obligations? How should those rebates issued in respect of dependant children to be treated? (Under the rebate program, the primary caregiver receives a rebate amount for each eligible child.)
Nature of the Resource Rebates
According to the enabling legislation, the rebates are considered to be 'refunds of an overpayment of the individual's liability under this Act for the 2005 taxation year.' Since the rebate amounts do not have any connection to income, salary, wages or remuneration, they do not fall under s. 68 of the BIA, and therefore are included as the property of the bankrupt as per s. 67. The rebates therefore should not be included in 'income' for the purposes of calculation of surplus income obligations under the BIA.
Except for certain Maintenance Enforcement arrears, the rebate amounts are exempt from execution or seizure, and cannot be assigned except under the Bankruptcy and Insolvency Act. (s. 35.3 (2) (b) and (c) of the ARRSAA) Therefore, unless voluntarily assigned, the rebates are considered property of the bankrupt that is not divisible amongst the creditors, as per s. 67 (1) (b) of the BIA.
Rebate cheques relating to bankrupt Albertans will be forwarded to the attention of the trustee by the Canada Revenue Agency, which is issuing the cheques on behalf of the province of Alberta. Trustees should explain to bankrupts that the amounts are exempt from seizure unless the bankrupt voluntarily assigns the rebate to the trustee for the benefit of the estate. Trustees should retain on file such an assignment signed by the bankrupt specifically identifying the resource rebate, and acknowledging that they have been informed that the rebate is exempt and that such assignment is being made on a voluntary basis. In the absence of such an assignment, the rebate is to be turned over to the bankrupt.
Rebate amounts relating to eligible children of the bankrupt (provided the bankrupt is the primary caregiver under the Child Tax Benefit program) do not appear to be paid in trust, and can likewise only be retained by the trustee for the benefit of the estate with a voluntary assignment of same by the bankrupt.
If the rebate cheques are received prior to the filing of an assignment in bankruptcy, the bankrupt would be required to demonstrate that any such funds deposited to a bank account were related to the Alberta Resource Rebate in order to benefit from the exemption. If the funds were spent on non-exempt property before the assignment, the exemption status for the rebate is lost.
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