Cases
Drover v. Canada, 98 DTC 6378 (FCA)
Before remitting the case to the Tax Court, Robertson J.A. noted that unlike the due diligence defence under s. 227.1 of the Income Tax Act, under...
Subsection 323(1) - Liability of Directors
Cases
Duque v. Canada, 2020 FCA 73
The taxpayer was the only director of a corporation which had been assessed for unremitted GST on taxable supplies made by it. It did not object,...
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| Tax Topics - Excise Tax Act - Section 168 - Subsection 168(7) | construction lien holdbacks excluded from taxable consideration | 150 |
Gougeon v. Canada, [2013] GSTC 42, 2012 FCA 294
The appellant was assessed in respect of approximately $10,000 of GST which was allegedly unpaid by the corporation of which he was the sole...
See Also
Delia v. Agence du revenu du Québec, 2018 QCCQ 9487
The ARQ commenced a QST audit of a corporation (Motostar) after its voluntary dissolution by its sole individual shareholder (Delia) and assessed...
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| Tax Topics - Other Legislation/Constitution - Federal - Canada Business Corporations Act - Section 226 - Subsection 226(2) | assessment against dissolved corporation was void because audit commenced after its dissolution | 361 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | there was no lack of diligence of the director in considering that the accounts accurately reflected no QST payable | 401 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | director exercised due diligence in relying on the accuracy of company accounts | 251 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | dissolved corporation could not be assessed for QST assessed pursuant to an audit that commenced after its dissolution | 222 |
| Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) | QBCA did not provide that audit or other proceedings could be commenced against a dissolved corporation | 129 |
Le v. The Queen, 2018 TCC 65 (Informal Procedure)
The taxpayer had intended to form a partnership with another party, who was under the misapprehension that a corporation was required in order to...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | an individual whose designation as a first director was defective, and who did not perform a director’s role, was not liable qua director | 464 |
Koskocan v. The Queen, 2016 TCC 277
The taxpayer, sold all the shares of a corporation (“9056”) operating a pizzeria, resigned as director, but continued to sign cheques for 9056...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | individual fulfilling an officer function not a de facto director | 106 |
MacDonald v. The Queen, 2014 DTC 1212 [at at 3839], 2014 TCC 308 (Informal Procedure)
After being approached by the incorporator ("Marney") of a pub, the appellant subscribed $10,000 for shares as a passive investment. He became an...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | not de facto director where unwittingly named to 3rd parties as director | 342 |
Mignardi v. The Queen, [2013] GSTC 39, 2013 TCC 67 (Informal Procedure)
The Minister assessed the appellant for director's liability in respect of a corporation that had not remitted net tax for reporting periods...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | failure to monitor other director | 73 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | no constructive resignation | 65 |
| Tax Topics - General Concepts - Onus | onus on Minister where taxpayer had no financial involvement | 116 |
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | onus on Minister where taxpayer had no financial involvement | 116 |
Chell v. The Queen, 2013 DTC 1055 [at at 299], 2013 TCC 29
The taxpayer was a director of an Alberta corporation ("cDemo") and a Delaware corporation ("Global"). Both corporations owed Canadian source...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 224 |
D'Amore v. The Queen, 2013 DTC 1005 [at at 33], 2012 TCC 373
The taxpayer directed a tavern business whose main clientele were university students. Payroll and GST/PST remittances were handled by his...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 275 |
Savoy v. The Queen, 2011 TCC 35, [2011] GSTC 15
After finding that the assessment of the appellant under ss 323 was not valid by virtue of s. 323(2)(b) as a certificate was not registered in the...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(2) - Paragraph 323(2)(b) | mandatory 6 month deadline applied even where corporate dissolution by Ontario Ministry | 245 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | director resignation not effective for failure to hold first shareholders' meeting | 121 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(b) | 6 month mandatory deadline applied even where involuntary dissolution | 168 |
Nachar v. The Queen, 2011 TCC 36, [2011] GSTC 12
After finding that the taxpayer director had shown due diligence respecting the failure of his corporation to remit GST on one category of its...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | failure to remit was due to confusion on 3rd party responsibilities and other sales handled properly | 111 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | director could challenge underlying corporate GST assessment | 126 |
Mosier v. The Queen, [2001] GSTC 124 (TCC)
Bowman A.C.J. found that the taxpayer's appointment as president of a failing business corporation, which entailed broad management powers, did...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 319 |
Siow v. The Queen, [2011] GSTC 99, 2011 TCC 301
The taxpayer was liable for unremitted GST as a director of his business corporation, notwithstanding a finding that the Minister failed to...
Lau v. The Queen, 2002 DTC 2212 (TCC)
The taxpayer was not a director on the basis only of various unsigned documents in the minute book designating her as a director.
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | 66 |
Subsection 323(2)
See Also
Freedom Cannabis Inc (Re), 2025 ABKB 272
Freedom Cannabis Inc. (“Freedom”) was in CCAA proceedings. The only bid for it or its assets came from a secured creditor (JLL), which...
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| Tax Topics - Other Legislation/Constitution - Federal - Companies' Creditors Arrangement Act - Section 11 | s. 11 accorded discretion to release directors' personal vicarious tax liability | 268 |
Canada v. Colitto, 2020 FCA 70
The taxpayer’s husband (Mr. Colitto) was acknowledged to be liable under s. 227.1 for the failure of his corporation to remit source deductions...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | a director’s s. 227.1 liability can flow through to a transferee under s. 160 well before the s. 227.1(2) claim conditions have been met | 403 |
| Tax Topics - Statutory Interpretation - Redundancy/reading in words | decision that had the effect of reading in words was reversed | 55 |
Paragraph 323(2)(a)
See Also
Archambault v. Agence du revenu du Québec, 2018 QCCQ 3291
The Quebec equivalent of ETA s. 323(2)(a) (in s. 24.0.1(a) of the Quebec Tax Administration Act) requires as a precondition to assessing a...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(a) | director’s assessment invalidated because the preceding corporate judgment proceeding had the wrong address | 302 |
Paragraph 323(2)(b)
See Also
Savoy v. The Queen, 2011 TCC 35, [2011] GSTC 15
The appellant resigned as director in June 2000 when his company ceased operating, but the resignation was not valid because no one was appointed...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | director resignation not effective for failure to hold first shareholders' meeting | 121 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | director had right to challenge underlying assessment | 112 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(b) | 6 month mandatory deadline applied even where involuntary dissolution | 168 |
Paragraph 323(2)(c)
Cases
Moriyama v. Canada, 2005 FCA 207
The taxpayer, who was a director of a bankrupt company, argued that the Minister had failed to file a proof of claim within six months from the...
Subsection 323(3) - Diligence
Cases
Ahmar v. Canada, 2020 FCA 65
After the corporation (“Strong Forming”) of which the taxpayer (Mr. Ahmar) was the sole shareholder, director and officer began to run out of...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | a director’s plan to turn the company around is not a due diligence defence to failure to remit | 182 |
Jarrold v. Canada, 2010 FCA 278
The appellant argued that the Tax Court judge erred in law in his application of the due diligence defence when he dismissed, as irrelevant,...
Liddle v. Canada, 2011 DTC 5083 [at at 5838], 2011 FCA 159
The taxpayer's appeal from liability under ss. 227.1 of the Income Tax Act and s. 323 of the Excise Tax Act was denied, given that the taxpayer...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 64 |
Canada v. Buckingham, 2011 DTC 5078 [at at 5810], 2011 FCA 142
The taxpayer was a director in a corporation that was in arrears on source deductions. He attempted to address the arrears through an equity...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 267 | |
| Tax Topics - Statutory Interpretation - Similar Statutes/ in pari materia | presumption of coherence | 46 |
Jobin v. Deputy Minister of Revenue for Québec, 2003 DTC 5043 (Cour du Québec (Civil Side))
The taxpayer had failed to establish due diligence under s. 24.0.2 of the Loi Sur le Ministére du Revenu given that he and the corporation had...
See Also
Penate v. The Queen, 2020 TCC 63
The taxpayer, Ms. Penate, was the sole director and shareholder of a roofing company (the “Company”) that fell behind in its GST/HST...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | due diligence defence grounded in sexual harassment by customers | 118 |
Delia v. Agence du revenu du Québec, 2018 QCCQ 9487
The appellant (“Delia”) had been the sole shareholder and director of a corporation (“Motostar”) engaged in a recreational vehicle sales...
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| Tax Topics - Other Legislation/Constitution - Federal - Canada Business Corporations Act - Section 226 - Subsection 226(2) | assessment against dissolved corporation was void because audit commenced after its dissolution | 361 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | director exercised due diligence in relying on the accuracy of company accounts | 251 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | assessment could be made of director for unremitted QST even though assessment therfor of dissolved corporation was void | 379 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | dissolved corporation could not be assessed for QST assessed pursuant to an audit that commenced after its dissolution | 222 |
| Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) | QBCA did not provide that audit or other proceedings could be commenced against a dissolved corporation | 129 |
Tozer v. The Queen, 2018 TCC 56
The taxpayer was the sole director (as well as CEO) of Atcon Group companies, including “Atcon” and “NB Inc.” In September 2008, the CRA...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | taxpayer did not cease to be a de jure director when displaced by receiver on the corporation’s bankruptcy | 235 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | bankruptcy did not result in constructive cessation of directorship | 109 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | ETA due diligence defence required active efforts once financial difficulty apparent | 48 |
Maxwell v. The Queen, 2015 DTC 1102 [at 610], 2015 TCC 74
The appellant, a professional engineer, had three related companies (the "Three Companies") which entered into a contract with a developer to...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | expectation of future payments, to which the taxpayer was clearly entitled, did not constitute due diligence] |
Mignardi v. The Queen, [2013] GSTC 39, 2013 TCC 67 (Informal Procedure)
It was unnecessary to evaluate the appellant's due diligence arguments, but Paris J found that they would not have succeeded. The essence of the...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | onus on Minister where taxpayer had no financial involvement | 116 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | no constructive resignation | 65 |
| Tax Topics - General Concepts - Onus | onus on Minister where taxpayer had no financial involvement | 116 |
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | onus on Minister where taxpayer had no financial involvement | 116 |
Deakin v. The Queen, 2012 DTC 1231 [at at 3634], 2012 TCC 270
Boyle J. found that the taxpayers did not have a due diligence defence for unremitted source deductions and GST collections because, regardless of...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 156 |
Martin v. The Queen, 2012 DTC 1253 [at at 3725], 2012 TCC 239
Angers J. found that the taxpayer, who was a director of two corporations forming part of a related group, was liable for unremitted income tax...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 158 |
Thomas v. R., [2011] GSTC 129, 20112011 TCC 421
The Appellant (an optometrist practising in Unity and Meadow Lake, Saskatchewan), who owned 75% of the shares of a corporation holding three...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | 71 |
Nachar v. The Queen, 2011 TCC 36, [2011] GSTC 12
The taxpayer (“Nachar”) was the sole director of a corporation (“Naza”) which operated a Mohawk/Husky (MH) gas station. GST had not been...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | director can challenge substantive merits of underlying assessment | 126 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | director could challenge underlying corporate GST assessment | 126 |
Power v. The Queen, [2011] GSTC 114, 2011 TCC 369 (Informal Procedure)
In rejecting a submission of the second appellant (Mr MacKay) that he had satisfied his due diligence defence by delegating management of the...
Snively v. The Queen, 2011 TCC 196 (Informal Procedure)
The appellant was the sole shareholder and sole director of a construction and heavy equipment rental business corporation (JDR). JDR had made...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | 116 | |
| Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 | 92 |
Lau v. The Queen, 2002 DTC 2212 (TCC)
The taxpayer exercised due diligence in leaving the bookkeeping work to his wife who had relied on an accounting firm for any assistance she...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | 25 |
Administrative Policy
4 December 2014 Internal T.I. 2014-0531251I7 - Directors' Liability
A limited partnership, which shortly will be declared bankrupt, failed to remit income tax source deductions and GST/HST. Would the general...
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| Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a) | GP generally liable for source deduction failures of LP | 102 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | directors of GP potentially liable for source deduction and GST remittance failures of LP | 137 |
Subsection 323(5) - Time Limit
Cases
Gagné Estate v. Canada, 2023 FCA 9
The deceased (Gagné) was assessed on May 22, 2013 under ETA s. 323 respecting unremitted net tax of a corporation that was majority-owned by him...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | no engaging of ETA s. 323(5) notwithstanding alleged defects in appointment as director | 208 |
Soulliere v. Canada, 2022 FCA 126
The taxpayer was named as the sole incorporating director of an Ontario corporation, and a few weeks later he submitted a written resignation as...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | an incorporating director’s resignation was invalidated because he was not replaced | 381 |
| Tax Topics - Statutory Interpretation - Consistency | presumption of consistent expression | 100 |
Cliff v. Canada, 2022 FCA 16
ITA s. 227.1(4) and ETA s. 323(5) indicate that a director cannot be assessed for unremitted corporate source deductions or GST more than two...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | a director can resign by email or text, but not through a notification to the companies branch | 299 |
See Also
Singh v. The Queen, 2019 TCC 120 (Informal Procedure)
Bocock J accepted the taxpayer’s evidence that he had resigned by written letter of resignation dated effective June 11, 2011 and had...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | director's resignation did not require public notification | 125 |
Tozer v. The Queen, 2018 TCC 56
In March 2010, two companies of which the taxpayer was the director were assigned into bankruptcy and a receiver and receiver manager (EY) was...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | bankruptcy did not result in constructive cessation of directorship | 109 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | taxpayer did not take active efforts (which required more than delegation) until some time after he became aware of the corporations’ financial difficulty | 350 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | ETA due diligence defence required active efforts once financial difficulty apparent | 48 |
Marra v. The Queen, 2016 DTC 1028 [at 2696], 2016 TCC 24
A company (financed by the appellant's husband but which has been run by a questionable character) was on shaky financial grounds, and her husband...
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| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | two years for a director’s derivative assessment ran from handing a resignation to the company’s lawyer, who did nothing with it | 315 |
Mignardi v. The Queen, [2013] GSTC 39, 2013 TCC 67 (Informal Procedure)
The appellant was unsuccessful in a submission that he had ceased to be a director of a corporation at the time of a meeting between him and...
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| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | onus on Minister where taxpayer had no financial involvement | 116 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | failure to monitor other director | 73 |
| Tax Topics - General Concepts - Onus | onus on Minister where taxpayer had no financial involvement | 116 |
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | onus on Minister where taxpayer had no financial involvement | 116 |
Thomas v. R., [2011] GSTC 129, 20112011 TCC 421
Although the corporation of which the Appellant was a director was struck from the Saskatchewan Corporate Register more than two years before the...
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|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | 108 |
Snively v. The Queen, 2011 TCC 196 (Informal Procedure)
The appellant, who was the sole shareholder and director of a corporation with a rental business, was found to be deemed by s. 115(4) of the...
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|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | 164 | |
| Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 | 92 |
Savoy v. The Queen, 2011 TCC 35, [2011] GSTC 15
The appellant resigned as director in June 2000 when his company ceased operating, but the resignation was not valid because no one was appointed...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(2) - Paragraph 323(2)(b) | mandatory 6 month deadline applied even where corporate dissolution by Ontario Ministry | 245 |
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | director had right to challenge underlying assessment | 112 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(b) | 6 month mandatory deadline applied even where involuntary dissolution | 168 |
Subsection 323(8) - Contribution
Cases
Adams v. Anderson, 2011 ONCA 381
The appellant and respondents were former directors of the same corporation. The appellant was assessed for the corporation's unremitted source...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(7) | 119 |