British Columbia's Climate Action Dividends

February 2008

The Climate Action Dividend is an initiative of the Province of British Columbia that is intended to promote environment-friendly lifestyles. The $100 dividends are payable to residents of British Columbia (as at ), with the first of the payments to be processed in June 2008. Trustees of bankrupts will receive these dividend cheques, the bulk of which will be issued by the Canada Revenue Agency.

Trustees have inquired about the nature of the monies in the context of bankruptcy.

Provincial officials have been in contact with the Office of the Superintendent of Bankruptcy, and have also expressed a desire to see a published notice to trustees on our website.

The enabling legislation, the Budget Measures Implementation Act, 2008, contains provisions to amend the British Columbia Income Tax Act. These provisions describe the dividends as "deemed overpayments" on account of an individual's tax liability for 2006. They further specify in subsection 13.03(d) that the dividends cannot be charged or given as security; cannot be assigned, garnished or attached; are exempt from execution or seizure; and cannot be retained by way of deduction or set-off under the Financial Administration Act. These provisions are drafted in substantially the same manner as those enacted by the Province of Alberta to create the 2005 Resource Rebates. The key difference in the drafting is that the Alberta Resource Rebates could theoretically be voluntarily assigned to a bankruptcy trustee, whereas the Climate Action Dividend cannot.

The Supreme Court of Canada decision in Marzetti v. Marzetti determined that s. 68 of the Bankruptcy and Insolvency Act (BIA) represented a complete code with respect to income, salary, wages or remuneration. It further described income as being a method of generating revenues for the individual through that individual's own work. As the Climate Action Dividend does not match this description, it must be considered as property under s. 67 of the BIA rather than income under s. 68. However, being exempt from seizure or execution, it is not divisible amongst creditors under s. 67(1)(b) of the BIA.

Trustees must therefore provide the Climate Action Dividend to the bankrupt. Being unseizable, unexecutable and unassignable under any circumstances, only the bankrupt can cash these cheques, and is free to do with the proceeds whatever he/she wishes. If a bankrupt chooses to pay the monies into the estate, it must be with the knowledge that this is done strictly on a voluntary basis. Trustees are expected to inform their bankrupts accordingly.

The province has additional information regarding the Climate Action Dividend on its website, as well as contact information for those who have further questions regarding eligibility or payment processing.

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