Principal Issues: Whether the Interpretation Act has an impact on the limitation period for assessing a director.
Position: Yes.
Reasons: Subsection 27(5) of the Interpretation Act.
October 27, 2009
Accounts Receivable Tax Programs Division HEADQUARTERS
Income Tax Rulings
Attention: Irene Rebizant, Manager Directorate
Field Support Section Lindsay Frank
(613) 948-2227
2009-033735
Directors' Liability - Limitation Period
This is in reply to an email from Maggie Chow. At issue is the scope of the limitation period for assessing a director under section 227.1 of the Income Tax Act ("ITA") and section 325 of the Excise Tax Act ("ETA").
Subsection 227.1(4) of the ITA and subsection 323(5) of the ETA provide that a director is not liable, unless the action or proceeding to recover the amount payable has been commenced against him or her within two years after he or she last ceased to be a director.
If a director ceased to be a director on August 14, 2009, the deadline for commencing an action or proceeding against that person is August 14, 2011, in accordance with subsection 27(5) of the Interpretation Act, which provides "Where anything is to be done within a time after, from, of or before a specified day, the time does not include that day". In other words, the last day does not count.
In Larocque v. M.N.R., [1991] 2 C.T.C. 2151 (T.C.C.), the director resigned his office on January 26, 1987, and was assessed pursuant to subsection 227.1(1) of the ITA on January 26, 1989. He argued that the date of the assessment was beyond the limitation period for commencing an action or proceeding. Citing subsection 27(5) of the Interpretation Act above, the Court rejected his argument.
Should you need clarification or additional information, please do not hesitate to call Lindsay Frank at the number provided above.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Business and Partnerships Division
Income Tax Rulings Directorate
c.c. Maggie Chow
Field Support Section
Accounts Receivable Tax Programs Division
