Income Contributions in Bankruptcy
A working bankrupt may be liable to make a contribution to their bankrupt estate from income earned during their bankruptcy. It is equitable that some of the rewards from the bankrupt’s efforts during the bankruptcy period be used to satisfy their past debts and this has been legislated for in the Bankruptcy Act.
A bankrupt’s income is assessed to determine whether contributions must be paid. The Bankruptcy Act sets out the definition of ‘income to be assessed’. Generally income has the same meaning as defined under Taxation Acts, but also includes other amounts that have not been earned from physical exertion or investments, and amounts that may not even be taxable income. These other incomes include loans made to the bankrupt, items that fall under the Fringe Benefits Tax, annuities, pensions and some social security or insurance payments.
If you would like further information about income contributions in bankruptcy or how a bankrupt’s income may be assessed, please contact our office and speak to one of our experienced practitioners.
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