Filion – Court of Quebec finds that a director is not liable for unremitted source deductions if he had no reason to suspect financial difficulty
The taxpayer, who was a titular director (but not the sole director) and a shareholder, was duped by those managing the company into believing it was in good financial shape. Accordingly, he established a due diligence defence under the Quebec equivalent of S. 227.1(3). After discussion the federal and Quebec jurisprudence, Massol JCQ concluded:
[T]he liability of a director is not engaged until the time that the corporation commences, to the knowledge of the director, a period of financial difficulty such that the corporation cannot meet its obligations or, worse, begins to favour some creditors to the detriment of the fisc.
Neal Armstrong. Summary of Filion v. Agence du revenu du Québec, 2018 QCCQ 2759 under s. 227.1(3).