Le – Tax Court of Canada finds that an individual whose designation as a first director was defective, and who did not perform a director’s role, was not liable qua director

The taxpayer had intended to form a partnership with another party, who was under the misapprehension that a corporation was required in order to form a partnership, and drafted documents for her to sign that reflected this confusion. Russell J found that the taxpayer was not a de jure director of the corporation, notwithstanding that she had been named in the notice of articles as a first director. She had not provided a written consent to be a director and she also was not an “incorporator,” whose definition in the B.C. Business Corporations Act referenced her signing an “incorporation agreement.” The only relevant agreement that she had signed was found by Russell J to instead be a partnership agreement.

She also was not a de facto director, Russell J stated:

Jurisprudence reflects that the concept of de facto director should be limited to persons who hold themselves out as directors.

The taxpayer in fact “engaged in no acts of management … let alone any actions specific to a director.”

Accordingly, she was not liable for assessments under the ITA and ETA director’s liability sections.

Neal Armstrong. Summary of Le v. The Queen, 2018 TCC 65 under ITA s. 227.1(1).