Custodio – Tax Court of Canada allows a director’s liability appeal for failure of the Crown to tender documents proving the unsatisfied-execution requirement in s. 227.1(2)(a)

One of the requirements to impose director’s liability under s. 227.1 for unremitted corporate source deductions is that the requirements in one of s. 227.1(1)(a) to (c) has been satisfied, the most relevant of which is usually the requirement in s. 227.1(2)(a) that a certificate for the delinquent amount has been registered in the Federal Court, and that amount had been returned unsatisfied in whole or in part.

Ouimet J noted that:

This proof is normally made by the deposit of the certificate registered in the Federal Court [and] a writ of seizure and sale or a report of the default by the bailiff.

Since the Crown had done none of this, the taxpayer’s appeal was allowed. It did not matter that the taxpayer had failed to put this failure in issue in his pleadings, as the onus was on the Crown throughout to demonstrate compliance with s. 227.1(2).

Neal Armstrong. Summary of Custodio v. The Queen, 2018 CCI 47 under s. 227.1(2)(a).