MacDonald – Tax Court of Canada case suggests that an operating corporation can have no de jure or de facto director

A shareholder of a corporation who had not been appointed as a director and who, unknowingly but in circumstances of extreme carelessness on his part, was named to third parties such as CRA and the corporate bank, as the corporation’s sole director, nonetheless was found not to be a de facto director of the corporation, so that he did not face personal liability for unremitted sources deductions and HST.  Rossiter ACJ found that "the concept of de facto director ... should be limited to those who hold themselves out as directors," which did not advertently occur here.

This case indicates that it is possible for an operating corporation to have no director including a de facto director.  However, the circumstances where this may have occurred in this case are unusual enough that there may not be broad policy concerns for CRA or Finance.

Neal Armstrong. Summary of MacDonald v. The Queen, 2014 TCC 308 under 227.1(1).