It is important to understand that amounts owing to CRA for income tax do not have any special status in a consumer proposal or personal bankruptcy. Income tax debts are unsecured debts and are treated the same as an unsecured credit card debt or unsecured line-of-credit from your bank. The treatment of income tax debt in a consumer proposal is the same as in a bankruptcy. Debts owing for income tax up to the date of filing your consumer proposal will be settled by the completion of your consumer proposal. You file your income tax return for the entire year in which you filed as you normally would file your income tax return. Generally, the income tax debt will be allocated on a pro-rata basis.  For example, if you filed your consumer proposal on March 31st, 25% of your income tax debt would be included in consumer bankruptcy (for 3 of 12 months) and the balance would be a post-proposal debt that you would have to pay. Sometimes a pro-rata split is not used and the Licensed Insolvency Trustee will discuss this with you if necessary. In personal bankruptcy, the debt will be split into pre- and post-filing periods as well. The main difference here is that there are two income tax returns filed for the year in which you filed and they are filed by the Licensed Insolvency Trustee based on information that you provide. The “pre-bankruptcy income tax return” covers from January 1st to the date of your personal bankruptcy filing. The “post-bankruptcy income tax return” covers the balance of the year to December 31st.  The income tax debt you owe up to the date of your bankruptcy filing will be extinguished by the completion of your bankruptcy. Any debts you owe to CRA for income earned after the date of your bankruptcy must be paid by you.