2405124 Ontario – Tax Court of Canada finds that a s. 244 Requirement applies to funds that the recipient is directed by its controlling shareholder (the tax debtor) to pay to him

CRA issued a Requirement to Pay to a corporation (240 Ontario) respecting the unpaid tax debt of its sole shareholder (IB), who was also its officer. IB, through his control of the corporate bank account, then withdrew funds from that account in order to repay credit card balances that he had run up on his wife’s credit card. S. 224(1), by its terms, indicated that the Requirement applied to any amount that 240 Ontario became liable to pay to another person within a year of the Requirement, and garnished that amount when it was paid.

In finding that the bank account withdrawals were subject to s. 224 so that 240 Ontario was liable for its failure to pay those amounts over to the Receiver General, Russell J stated that “[j]urisprudence has established that the subsection 224(1) language ‘liable to make a payment’ applies where there is responsibility at law to make a payment,” and found that such responsibility to pay the amounts arose when IB through his “ownership of and authority over 240 Ontario” required it to pay the funds to him.

Neal Armstrong. Summary of 2405124 Ontario Ltd. v. The King, 2023 TCC 57 under s. 224(1).