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Does filing for bankruptcy get rid of tax debt I owe to CRA?

TSL Written by the Treadstone Law team· Updated August 2026

Generally, yes, in the ordinary case. Filing for personal bankruptcy under the federal Bankruptcy and Insolvency Act can discharge, or eliminate, ordinary income tax debt, much like most other unsecured debts you might owe. This actually surprises a lot of people, since many assume tax debt always survives bankruptcy no matter what, when in the typical case it's treated as dischargeable in the same way as other unsecured debt.

That said, this is a genuinely fact-dependent area with real exceptions and complications, so it's important not to treat it as an absolute rule either way. Certain circumstances, including particularly large tax debts, specific timing issues around when the debt arose relative to the bankruptcy, or situations connected to fraud, can be treated differently and may not simply disappear through discharge. It's also worth remembering that secured claims, like a registered CRA certificate or lien on your property, aren't automatically wiped out through bankruptcy the way an unsecured debt is, since bankruptcy discharge and a secured claim against specific property work differently. Given how much depends on the specific facts of your debt and your bankruptcy, getting individualized advice before assuming bankruptcy will resolve a tax debt is the sensible approach.

Key takeaways

  • Ordinary income tax debt is generally dischargeable in bankruptcy, like most unsecured debt.
  • This surprises many people who assume tax debt always survives bankruptcy - it usually doesn't.
  • Exceptions exist for large debts, specific timing issues, and debts connected to fraud.
  • A registered CRA lien or certificate against property isn't automatically wiped out the way unsecured debt is.
This is general information, not legal advice. It doesn’t create a lawyer–client relationship, and the rules can change. For advice on your situation, a Treadstone tax lawyer can help.
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