Subsection 227.1(1) - Liability of directors for failure to deduct
Cases
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 - Excise Tax Act - Section 323 - Subsection 323(2) | director's liability arises before procedures are taken against the corporation | 298 |
| Tax Topics - Statutory Interpretation - Redundancy/reading in words | decision that had the effect of reading in words was reversed | 55 |
Attorney General of Canada v. McKinnon, 2000 DTC 6593 (FCA)
Evans J.A., before going on to find that the taxpayers had established the due diligence defence under s. 227.1(3), indicated (at p. 6602) that it...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | turnaround prospects | 154 |
Wheeliker v. R., 99 DTC 5658, [1999] 2 CTC 395 (FCA)
The appellants were found not to be directors of a not-for-profit Nova Scotia corporation because they did not hold shares. Noel J.A. found that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 106 | |
| Tax Topics - Statutory Interpretation - Provincial Law | 39 |
Clarke v. The Queen, 2000 DTC 6230 (FCTD)
Amounts which the corporation had failed to remit were evidenced by promissory notes issued to Revenue Canada to be paid on a deferred basis....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 96 |
Parton v. R.|, 99 DTC 738, [1999] 2 CTC 2755 (TCC)
After noting the distinction in Morris v. Kanssen, [1946] 1 All E. R. 586 (HL) between a defective appointment and no appointment at all, Lammarre...
The Queen v. Leung, 93 DTC 5467, [1993] 2 CTC 284 (FCTD)
A reassessment of a director in respect of the aggregate amount of source deductions which the corporation had failed to make under the Act and...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(3) | reassessment valid notwithstanding missing particulars | 84 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) | notice of assessment was sufficient to put the taxpayer on notice of the particular amount claimed | 106 |
See Also
Le v. The Queen, 2018 TCC 65 (Informal Procedure)
The taxpayer, who operated several beauty salons, entered into an arrangement (respecting a new beauty salon) which she understood to be a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | individual was not validly appointed as director and was not a de factor director | 204 |
Koskocan v. The Queen, 2016 TCC 277
A taxpayer sold all his shares of a company to his son, resigned as director, but continued to sign most of the cheques due to bank requirements. ...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | individual signing most of a company’s cheques was not a de facto director | 372 |
Jobin v. The Queen, 2015 DTC 1096 [at 560-61], 2014 TCC 326
The taxpayer was the sole director and shareholder of a numbered CBCA corporation that went bankrupt in 2003 with unremitted source-deductions. In...
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | not de facto director where unwittingly named to 3rd parties as director | 342 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | 224 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| 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 - Excise Tax Act - Section 323 - Subsection 323(1) | director can challenge substantive merits of underlying assessment | 126 |
Lequier v. The Queen, 2010 TCC 474, 2010 DTC 1321 [at at 4219] (Informal Procedure)
The taxpayer was a corporate director with her husband. When the two separated, the taxpayer believed she had resigned as director. She did not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 103 |
Hartrell v. The Queen, 2006 DTC 3548, 2006 TCC 480
Before finding that the taxpayer was a de facto director of a corporation that had never been organized on the basis that the taxpayer along with...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | 75 |
Buckingham v. The Queen, 2010 TCC 247, rev'd 2011 FCA 142
Webb J. found that, to the extent that the taxpayer's appeal pertained to the New Brunswick Income Tax Act, that portion of the taxpayer's case...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Provincial Law | 81 |
McDougall v. The Queen, 2001 DTC 2651 (TCC)
The appellant was found to be a de facto director and, therefore, subject to the application of s. 227.1 of the Act and s. 323 of the ETA given...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 33 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | 319 |
Dirienzo v. The Queen, 2000 DTC 2230 (TCC)
The uncle of the taxpayer was found to be a de facto director as described under s. 1(1) of the Business Corporations Act (Ontario). Accordingly,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 48 |
Wheeliker v. R., 98 DTC 1110, [1998] 1 CTC 2021 (TCC)
Because the taxpayer and other alleged directors of a non-profit corporation did not hold any shares of the corporation contrary to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 60 |
Myers v. R., 98 DTC 1057, [1998] 1 CTC 2056 (TCC)
The taxpayer, who acquired all the shares of a private company, was found not to become a director of the corporation for purposes of s. 227.1...
Roll v. MNR, 92 DTC 1446, [1992] 2 CTC 2060 (TCC)
An assessment of the appellant under s. 227.1 which referred to unpaid deductions, interest and penalties payable by the corporation in respect of...
Laxton v. MNR, 89 D.T.C. 629, [1989] 2 CTC 2407 (TCC)
The taxpayer were the director of a corporation (the "Corporation") which was the general partner of a limited partnership, and he also was a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a) | GP responsible for LP source deductions | 211 |
Administrative Policy
26 March 2024 Internal T.I. 2023-0974091I7 - Interaction between s. 220(3.1) and 227.1(1)
A corporation was assessed in its 2007, 2008 and 2010 taxation years regarding unremitted source deductions for its 2006 to 2009 taxation years...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) | 10 year limitation in s. 220(3.1) applied based on the taxation years in which the underlying corporate liability arose | 226 |
16 August 2017 Internal T.I. 2015-0622751I7 - Part XIII Tax on Benefit to Non-resident
A foreign subsidiary of Canco (Opco) in turn wholly-owned a non-resident “Finco,” which made an interest-free loan to a non-resident sister of...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(9) | s. 15(9) applies to interest-free loan between two foreign affiliates | 285 |
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | use of s. 160 to collect s. 15(9) liability of indirect FA on dividends paid to Canco | 275 |
| Tax Topics - Income Tax Act - Section 215 - Subsection 215(1) | CFA liable for failure to "withhold" and remit Pt XIII tax on interest-free benefit on loan to NR sister of its Cdn grandparent | 127 |
| Tax Topics - Income Tax Act - Section 214 - Subsection 214(3) - Paragraph 214(3)(a) | benefit from interest free loan by CFA to Canco sister deemed to be a dividend subject to Pt XIII tax | 177 |
| Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(2) | extra-territorial application of s. 80.4(2) | 134 |
4 December 2014 Internal T.I. 2014-0531251I7 - Directors' Liability
A limited partnership, which shortly will be declared bankrupt, failed to remit source deductions. Would the general partner, which is a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | directors of GP potentially liable for GST remittance failures of LP | 136 |
| Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a) | GP generally liable for source deduction failures of LP | 102 |
9 August 2012 External T.I. 2012-0446051E5 - Director's liability for provincial assessment
Although the Tax Court lacks jurisdiction to hear appeals from a provincial assessment (see Buckingham v. The Queen, 2010 TCC 247 and Seier v....
88 C.R. - F.Q. 7
The legislation does not draw a distinction between directors of business and non-share corporations.
85 C.R. - Q.81
a notice of objection filed by a director is usually dealt with by the district office where he resides.
84 C.R. Q.7
re interrelationship between s. 227.1 and 227(8)
Articles
Brian M. Studniberg, "Identifying the De Facto Director", Canadian Tax Journal, (2015) 63:4, 1073-95
Corporate law concept of de facto director (p.1079)
A recent text on Canada's modern business corporations' law observes that there are now three...
Subsection 227.1(2) - Limitations on liability
Paragraph 227.1(2)(a)
Cases
Kyte v. The Queen, 96 DTC 6050, [1996] 1 CTC 151 (FCTD), aff'd 97 DTC 5022 (FCA)
Although a certificate issued under s. 227.1(2)(a) for a principal amount of $500,000 did not correspond to the amount of the corporation's tax...
See Also
Colitto v. The Queen, 2019 TCC 88
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) - Paragraph 160(1)(e) - Subparagraph 160(1)(e)(ii) | a director’s s. 227.1 liability cannot flow through to a transferee under s. 160 unless the s. 227.1(2) claim procedures have first occurred | 517 |
Archambault v. Agence du revenu du Québec, 2018 QCCQ 3291
The taxpayer, a painter and plasterer who read only haltingly, was persuaded to let a rogue (“Bellefleur”) to acquire (together with...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(2) - Paragraph 323(2)(a) | failure to use the correct corporate address | 137 |
Custodio v. The Queen, 2018 TCC 47
The sole client for the IT and accounting services of the taxpayer was a group of companies. He was appointed as the director for one of these...
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|---|---|---|
| Tax Topics - General Concepts - Onus | onus of Crown to demonstrate compliance with s. 227.1(2)(a) irrespective of taxpayer's pleadings | 92 |
Walsh v. The Queen, 2009 DTC 1372, 2009 TCC 557
After the Court refused the admission into evidence of a copy of a letter from the Sheriff's Office advising that the Writ of Seizure and Sale had...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | 105 |
Gaitens v. The Queen, 93 DTC 54, [1993] 1 CTC 2168 (TCC)
The Minister did not fulfil the precondition in s. 227.1(2)(a) when he filed a certificate that did not take into account the amount of a Part...
Walters v. MNR, 86 DTC 1740, [1986] 2 CTC 2327 (TCC)
Notwithstanding that the CRA had seen the minute book of the corporation in question which recorded the change in its name from W.S.W. Tool & Die...
Administrative Policy
86 C.R. - Q.88
the sale of all or substantially all of a corporation's assets is not "liquidation or dissolution proceedings".
Paragraph 227.1(2)(b)
Cases
Madison v. Canada, 2012 DTC 5072 [at at 6935], 2012 FCA 80
In deciding which of ss. 227.1(2)(a), (b) or (c) applied to the taxpayer's appeal from director's liability, Sharlow J.A. stated (at para....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Evidence | hearsay evidence in informal procedure case | 139 |
Kennedy v. MNR, 91 DTC 1037, [1991] 2 CTC 2333 (TCC), briefly aff'd 92 DTC 6380 (FCA)
Following the voluntary dissolution of the corporation pursuant to s. 205 of the Business Corporations Act (Alberta) the Crown obtained the...
See Also
Savoy v. The Queen, 2011 TCC 35, [2011] GSTC 15
The appellant's company was dissolved in May 2006 by the Ontario Ministry for failure to file returns, and CRA did not register a certificate in...
| 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(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 |
Paragraph 227.1(2)(c)
See Also
Grant v. The Queen, 2017 TCC 121
The taxpayer was the director of a corporation that made an assignment in bankruptcy on August 1, 2006. Shortly thereafter, the trustee in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | corporate bankruptcy did not cause the taxpayer to cease to be a director/“due dispatch” requirement inapplicable to director’s assessment | 271 |
| Tax Topics - Income Tax Act - Section 227 - Subsection 227(10) | “due dispatch” not required for director’s assessment | 127 |
Subsection 227.1(3) - Idem [Limitations on liability]
Cases
Canada v. Chriss, 2016 FCA 236
The two taxpayers (Mrs. Gariepy and Mrs. Chriss) were appointed as the two directors of an Ontario corporation ("105") which was run by their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | a written resignation must be signed and delivered to the corporation to start the two-year s. 227.1(4) period running | 265 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | 267 | |
| Tax Topics - Statutory Interpretation - Similar Statutes/ in pari materia | presumption of coherence | 46 |
Smith v. The Queen, 2001 DTC 5226 (FCA)
The taxpayer, who was a high school teacher and a minority shareholder of a company ("ECO") was elected to the board of directors of ECO in order...
Hanson v. The Queen, 2000 DTC 6564 (FCA)
The taxpayer failed to make out the due diligence defence given that she made no effort to find out what were her responsibilities as a director,...
Attorney General of Canada v. McKinnon, 2000 DTC 6593 (FCA)
On October 18, 1993 the company's bank dishonoured a cheque drawn in favour of the Receiver General for Canada in respect of September payroll...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | receiver supercedes directors | 100 |
Wheeliker v. R., 99 DTC 5658, [1999] 2 CTC 395 (FCA)
Before going on to find the appellants (who were de facto directors of a Nova Scotia non-for-profit corporation) liable, Létourneau J.A indicated...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 204 | |
| Tax Topics - Statutory Interpretation - Provincial Law | 39 |
Berdugo v. Ministre Du Revenu National, 99 DTC 5424, [1999] 3 CTC 585 (FCTD)
Before going on to find liability for the taxpayer, Richard A.C.J. indicated (at. p. 5427) that the taxpayer was an inside director of the...
Clarke v. The Queen, 2000 DTC 6230 (FCTD)
The plaintiffs were absolved of responsibility in respect of failures to remit that occurred during a "soft receivership" given that ultimate...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 134 |
Short v. The Queen, 99 DTC 5371 (FCTD)
The taxpayer, who was the president of a small construction company and a co-director with his wife, failed to meet the due diligence defence in...
Soper v. R., 97 DTC 5407, [1997] 3 C.T.C. 242 (FCA)
The taxpayer, who was the chief operating officer of an unrelated corporation, was invited to sit on the board in order to promote the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Other/Conflicting Statutes | presumption of coherence | 36 |
| Tax Topics - Statutory Interpretation - Similar Statutes/ in pari materia | presumed coherence in federal statutes | 44 |
Wilson v. The Queen, 96 DTC 6417 (FCTD)
The taxpayer failed in establishing the due diligence defence for two of the three corporations of which he was an officer, director and...
Shindle v. The Queen, 95 DTC 5502, [1995] 2 CTC 227 (FCTD)
The taxpayers were directors of a Saskatchewan company that was managed by their son. After the unsuccessful operations of the company in...
Robitaille v. The Queen, 90 DTC 6059, [1990] 1 CTC 121 (FCTD)
The appellant was appointed as one of the three directors of a company managed by her brother-in-law, but did not participate in the management of...
See Also
Demers v. Agence du revenu du Québec, 2020 QCCA 681
The individual appellant (“Demers”) was a director at all relevant times of a corporation that owned and operated a minor professional hockey...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) | failure to treat hockey players as employees based on flawed and non-independent legal advice was carelessness that opened up a statute-barred year | 521 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| 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 - 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 |
Filion v. Agence du revenu du Québec, 2018 QCCQ 2759
The appellant invested $15,000 in the shares of a company (“9209’) that opened a small restaurant in December 2010. Although the appellant...
Tozer v. The Queen, 2018 TCC 56
Smith J found that the taxpayer was required to take active efforts to pursue the timely remittance of the corporate GST net tax rather than...
| Locations of other summaries | Wordcount | |
|---|---|---|
| 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 - 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 |
6094350 Canada Inc. and Genex Communications Inc.v. Agence du revenu du Québec, 2018 QCCQ 556, aff'd in part (rev'd on statute-barring issue) sub nom.Demers v. Agence du revenu du Québec, 2020 QCCA 681
The individual appellant (“Demers”) was a director at all relevant times of a corporation that owned and operated a minor professional hockey...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | hockey players were employees of the team | 385 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | CRA treatment of taxpayer’s players as independent contractors was not binding on the ARQ | 95 |
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...
| Other locations for this summary | |
|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | expectation of future payments, to which the taxpayer was clearly entitled, did not constitute due diligence] |
Gariepy v. The Queen, 2014 TCC 254
After finding that the taxpayers had resigned in 2001, notwithstanding that written resignation forms were not signed by them, so that 2008...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | unsigned written resignations were effective | 144 |
Roitelman v. The Queen, 2014 DTC 1129 [at at 3348], 2014 TCC 139
The appellant hired, through his corporation, a bookkeeper whose responsibilities included payroll remittances, which enabled him to do the...
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(1) | 275 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | 157 |
Seier v. The Queen, 2010 DTC 1344 [at at 4313], 2010 TCC 495
In October 2000, a newly-incorporated corporation of of the taxpayer (the "Corporation") acquired all the assets of a bankrupt truck repairs...
Lequier v. The Queen, 2010 TCC 474, 2010 DTC 1321 [at at 4219] (Informal Procedure)
The taxpayer was a corporate director with her husband. When the two separated, the taxpayer erroneously believed she had resigned as director....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 80 |
Pascoal v. The Queen, 2010 DTC 1010 [at at 2578], 2009 TCC 608
The two taxpayers were the father and sister of the controlling shareholder ("Tony") of the corporations in question. In finding that they were...
Burton v. The Queen, 2006 DTC 2001, 2005 TCC 762 (Informal Procedure)
MacArthur J. accepted testimony that the taxpayer had resigned as director early in 2002 notwithstanding that the only copy of the written notice...
People's Stores v. Wise, 2004 SCR 68
In commenting on the statutory fiduciary duty of directors under s. 122(1)(b) of the Canada Business Corporations Act, the Court indicated that...
McKinnon v. The Queen, 2004 DTC 2049, 2003 TCC 884
The failure of the company to remit source deduction was due to an unforeseen supervening event (the arbitrary improper refusal of a major...
McDougall v. The Queen, 2001 DTC 2651 (TCC)
Beaubier TCJ applied the six tests in Attorney General of Canada v. McKinnon (FCA), No. A-421-98 to find that the appellant failed to establish...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 80 |
Dirienzo v. The Queen, 2000 DTC 2230 (TCC)
The taxpayer, who was nominally the director of a company dominated by his uncle (the uncle having been found to be a de facto director) was found...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 43 |
Macdonald v. R., 99 DTC 1108, [1999] 4 CTC 2060 (TCC)
The taxpayer (who was a highly educated civil engineer with extensive business and management history and the controller and general manager of...
Boisvert v. The Queen, 98 DTC 1146 (TCC)
The taxpayers were liable for failures of the corporation to remit source deductions during the period between the time of appointment of a...
Wheeliker v. R., 98 DTC 1110, [1998] 1 CTC 2021 (TCC)
Before going on to find that the taxpayers, who were alleged by the Crown to be directors of a non-profit corporation, had established the defence...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 110 |
Schultheiss v. The Queen, 97 DTC 863 (TCC)
Unlike the two other taxpayers (who were liable given their active involvement in the business), the third taxpayer "was an elderly man of minimal...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | 102 |
Hanson v. The Queen, 97 DTC 796 (TCC)
The taxpayer, who was a nurse, testified that she knew nothing about the restaurant business of her son's corporation, had no interest in it as...
Johnstone v. Minister of National Revenue, 97 DTC 355, [1997] 2 CTC 3085 (TCC)
Teskey TCJ. was satisfied that in the circumstances the taxpayers (who were passive directors) had appropriately relied upon management and a...
Davies-Edwards v. The Queen, 97 DTC 373 (TCC)
The taxpayer, who was described as being unsophisticated and naive in corporate and business matters, served as a volunteer director of a...
Hadad v. MNR, 94 DTC 1847 (TCC)
Christie A.C.J. characterized the failure of a corporation to make sufficient qualifying expenditures in order to eliminate its liability for Part...
Davies v. The Queen, 94 DTC 1716, [1994] 1 CTC 2744 (TCC)
The three appellants, became directors of the corporation ("INOVA") in order to provide their expertise in the areas of marketing, production and...
Ivezic v. MNR, 92 DTC 1066, [1992] 1 CTC 2124 (TCC)
In upholding a liability of the taxpayer under s. 227.1 in respect of the corporation's ilure to reduce his Part VIII tax liability through the...
Myers v. MNR, 91 DTC 72 (TCC)
The taxpayer authorized the payment of the payroll at a time when he anticipated that, notwithstanding great financial pressures, the company...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 72 |
Myers v. MNR, 91 DTC 72 (TCC)
The taxpayer authorized the payment of the payroll at a time when he anticipated that, notwithstanding great financial pressures, the company...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 72 |
Vogt v. MNR, 91 DTC 1326, [1991] 2 CTC 2760 (TCC)
The taxpayer exercised the requisite degree of care and diligence when, at a time that he thought that amounts due to the corporation which had...
Van Leenen v. MNR, 91 DTC 1265, [1991] 2 CTC 2442 (TCC)
The taxpayer, who was the president and majority shareholder of the corporation, was found to have been deficient in relying on established...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | 84 |
Pidskalny v. MNR, 91 DTC 1046, [1991] 2 CTC 2192 (TCC)
The appellant, who became director merely to accommodate his brother's needs and suggestions, who had no real economic interest in the...
MacArthur v. MNR, 91 DTC 957, [1991] 2 CTC 2078 (TCC)
At the closing of a sale of his shares of a corporation carrying on a restaurant business, the taxpayer tendered a resignation which was to become...
Byrt v. MNR, 91 DTC 923, [1991] 2 CTC 2174 (TCC)
The taxpayer failed to meet the due diligence defence given that he chose to ignore various "disturbing actions" of the president of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Estoppel | 159 |
Susan Sheremeta v. Minister of National Revenue, 91 DTC 867, [1991] 1 CTC 2593 (TCC)
The taxpayer, who was a school teacher, became the sole director of the corporation to accommodate her husband, who was unable to be a director...
Collins v. MNR, 91 DTC 819 (TCC)
The taxpayer believed that his corporation had an arrangement with the T-D Bank whereby the bank would finance the gross payroll costs (including...
William Perry v. Minister of National Revenue, 91 DTC 696, [1991] 1 CTC 2679 (TCC)
In 1981 the taxpayer sold all his shares of the corporation in consideration for a secured debenture of the corporation, but remained on as a...
Noonan v. MNR, 91 DTC 416 (TCC)
Unlike her co-directors, who were accountants and experienced businessmen and who were involved in the business of the corporation, the taxpayer...
Golfman v. MNR, 90 DTC 1863, [1990] 2 CTC 2344 (TCC)
A legal advisor to the corporation, who prior to becoming director examined the financial statements and received assurances that there were no...
Deschènes v. MNR, 90 DTC 1342 (TCC)
Proulx J. quoted with approval (at p. 1344) the following passage from Emshwiller v. U.S., 565 F. (2d) 1041:
"We are not insensitive to the...
Champeval v. MNR, 90 DTC 1291, [1990] 1 CTC 2385 (TCC)
The taxpayers successfully appealed against assessments under s. 227.1 on the ground that the corporation's bank alone determined which of the...
Swertz v. MNR, 90 DTC 1056, [1990] 1 CTC 2160 (TCC)
By virtue of s. 91 of the Business Corporations Act, the appointment of a receiver-manager by the CIBC rendered the appellant powerless to do...
McCullough v. MNR, 89 DTC 446, [1989] 2 CTC 2236 (TCC)
Revenue Canada assessed a co-director (Mr. Sandrin) of the taxpayer for $27,000 in respect of unpaid source deductions, garnished this amount, and...
Merson v. MNR, 89 DTC 22, [1989] 1 CTC 2074 (TCC)
The company's failure to remit source deductions was attributed to the unexpected refusal of the de facto receiver of the company to authorize...
Beutler v. MNR, 88 DTC 1286, [1988] 1 CTC 2414 (TCC)
The taxpayer and his co-director made a deliberate decision not to make remittances on time because of cash flow difficulties, and did not keep...
Cybulski v. The Queen, 88 DTC 1531, [1988] 2 CTC 2180 (TCC)
The taxpayer submitted his resignation as an officer and director on May 1, 1984, and was effectively shut out from the company after that point....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(4) | 171 |
Edmondson v. MNR, 88 DTC 1542, [1988] 2 CTC 2185 (TCC)
The taxpayer, who was "completely unaware of a director's duties," when he realized that Revenue Canada had made a demand of the company for...
Fancy v. MNR, 88 DTC 1641, [1988] 2 CTC 2256 (TCC)
When a small excavating company of which the taxpayer and has wife were directors and officers began encountering cash flow difficulties, the bank...
Quantz v. MNR, 88 DTC 1201, [1988] 1 CTC 2276 (TCC)
The director of a private manufacturer of caskets who concentrated on manufacturing and marketing, was faulted by Goetz J. for not at least...
Fraser v. MNR, 87 DTC 250, [1987] 1 CTC 2311 (TCC)
A director of a private company was responsible for the manufacturing side of the business and the two other directors (the president and...
Administrative Policy
88 C.R. - "Director's Liability"
The director is required to take positive steps to ensure the corporation remits source deductions (which may include establishing controls and...
88 C.R. - F.Q.5
A director may be able to protect himself by putting forward a resolution for the requisite controls, then having it recorded that he was out-voted.
88 C.R. - F.Q.6
There should be evidence in the minute book of the director tabling, as an objective, the obtaining of a guarantee from the corporation's bankers...
88 C.R. - F.Q. 8
The onus of proof that due diligence has been exercised always rests with the directors.
87 C.R. - Q.77
the obligation to administer appropriate controls applies equally to directors of small private corporations and major public ones.
87 C.R. - Q.78
every effort is made to collect the amounts owing from the corporation prior to considering assessment under s. 227.1. Head Office and perhaps...
87 C.R. - Q.81
there is no distinction between active and outside directors.
86 C.R. - Q.86
RC does not distinguish between active and passive directors.
86 C.R. - Q.87
each director is first given an opportunity to make written submissions
IC 89-2 "Directors' Liability - Section 227.1 of the Income Tax Act"
Articles
Fien, "Directors' Liability and Indemnifications, Section 160 Assessments and Ordinary Course of Business Provisions", 1992 Conference Report, c. 53.
Fulcher, "Section 227.1 of the Income Tax Act and the Director's Duty of Care in BCA Jurisdictions: Some Lessons From the Corporate Governance Debate of the Last Twenty-Five Years", Canadian Petroleum Tax Journal, Spring, 1992, p. 17.
Moskowitz, "Directors' Liability: An Update", 1991 Conference Report, c. 47.
Heinrich, "Judicial Response to Director's Liability and Crown Garnishment Priorities", 1991 British Columbia Tax Conference, Volume 1.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 224 - Subsection 224(1.2) | 0 |
Moskowitz, "Directors' Liability under Income Tax Legislation and Other Related Statutes", 1990 Canadian Tax Journal, p. 537.
Subsection 227.1(4) - Limitation period
Cases
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | failure to replace initial director invalidated his purported resignation | 259 |
| Tax Topics - Statutory Interpretation - Consistency | presumption of consistent expression | 100 |
Cliff v. Canada, 2022 FCA 16
The taxpayer, who was subsequently assessed as a director respecting unremitted source deductions and GST of a corporation, claimed that she had...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | although resignation can occur by email, text or letter, a Ministry notification form is not a written resignation | 178 |
Canada v. Chriss, 2016 FCA 236
The two taxpayers (Mrs. Gariepy and Mrs. Chriss) were appointed as the two directors of an Ontario corporation ("105") which was run by their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | director must verify that she has resigned | 270 |
Gariepy v. The Queen, 2014 TCC 254
The two taxpayers (Mrs. Gariepy and Mrs. Chriss) were appointed as the two directors of an Ontario corporation ("105") which was run by their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | reasonable belief in resignation constituted a due diligence defence, "economic necessity" defence rejected | 244 |
Létourneau v. Canada, 2012 DTC 5044 [at at 6777], 2011 FCA 354
The trial judge found that the taxpayer was a director of a business corporation when its remittance failures arose in 2001 and 2002, despite her...
Butterfield v. The Queen, 2009 DTC 1382 [at at 2108], 2009 TCC 575, aff'd 2011 DTC 5005 [at 5510], 2010 FCA 330
In rejecting the taxpayer's argument that he ceased to be a director by virtue of an assignment in bankruptcy by the corporation in question, C....
Re Blackwater Marine Inc., 2010 DTC 5087 [at at 6877], 2010 BCSC 340
CRA sought to have a BC corporation, that had been dissolved, restored and its sole director restored as of the date of the dissolution in order...
The Queen v. Kalef, 96 DTC 6132, [1996] 2 CTC 1 (FCA)
The taxpayer did not cease to be a director of an Ontario corporation for purposes of the two-year limitation period in s. 227.1(4) when a trustee...
The Queen v. Wellburn, 95 DTC 5417, [1995] 2 CTC 196 (FCTD)
Although under the B.C. Company Act, the appointment of a receiver-manager of the corporation did not cause individuals to cease to be directors,...
See Also
Gagné Estate v. Canada, 2023 FCA 9
The deceased (Gagné) was assessed less than two years after the registry under the Act respecting the Legal Publicity of Enterprises (Quebec)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | mooted defective appointment of the taxpayer as a director did not avoid liability for corporate remittance failures | 386 |
Penate v. The Queen, 2020 TCC 63
The taxpayer, Ms. Penate, was the sole director and shareholder of a roofing company that fell behind in its GST/HST remittances. Campbell J...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | sexual harassment by customers and no evidence of diversion of GST/HST collections established a due diligence defence | 198 |
Ahmar v. Canada, 2020 FCA 65
After a construction company (Strong Forming) began to run out of money, its sole shareholder, director and officer (Mr. Ahmar) decided that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(3) | due diligence defence inconsistent with using "deferred" HST remittances to fund ongoing business | 285 |
Singh v. The Queen, 2019 TCC 120 (Informal Procedure)
Similarly to ITA s. 227.1(4), ETA s. 323(5) indicates that a director’s assessment under ETA s. 323 is invalid if made more than two years after...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | a written director’s resignation that was not fully recorded was valid | 148 |
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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| 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 - 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 |
Grant v. The Queen, 2017 TCC 121
The taxpayer was the director of a corporation that made an assignment in bankruptcy on August 1, 2006. In 2012, he was assessed pursuant to s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227 - Subsection 227(10) | “due dispatch” not required for director’s assessment | 127 |
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(c) | failure of CRA to timely send proof of claim to the right trustee was not fatal (s. 227.1(2)(c) is directory) | 402 |
Marra v. The Queen, 2016 DTC 1028 [at 2696], 2016 TCC 24
The appellant (Ms. Marra”) became a director of a company, Sani-Clean, on her husband’s request. He had financed the company, but day to day...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(5) | two years for a director’s derivative assessment ran from handing a resignation to the company’s lawyer, who did nothing with it | 147 |
Bekesinski v. The Queen, 2014 DTC 3604 [at at 1169], 2014 TCC 245
The appellant contended that he had resigned as director in 2006, so that an assessment under s. 227.1(1) in 2010 was out of time. The Minister's...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Onus | unspecific pleadings were more readily demolished, improbable allegations treated with greater care | 189 |
Bohbot-Gagnon v. The Queen, 2013 DTC 1185 [at at 998], 2013 TCC 128
The taxpayer was the sole director of a corporation which had, under another person's management, failed to remit source deductions. Upon...
Priftis v. The Queen, 2013 DTC 1030 [at at 141], 2012 TCC 414 (Informal Procedure)
The Minister assessed a director on 15 July 2010 for unremitted CPP amounts of a corporation that was dissolved on 15 July 2008. Angers J. found...
Walsh v. The Queen, 2009 DTC 1372, 2009 TCC 557
The taxpayer had satisfied the requirement that there have been "meaningful communication with the corporation" of his decision to resign when he...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(2) - Paragraph 227.1(2)(a) | 78 |
Moll v. The Queen, 2008 DTC 3420, 2008 TCC 234 (Informal Procedure)
A written resignation of the taxpayer as sole director of the corporation dated more than two years before his assessment under s. 227.1 was found...
Hamilton v. The Queen, 2007 DTC 121, 2006 TCC 603
The taxpayer was liable under s. 227.1 in respect of the failure of a corporation of which he was a director to withhold on various amounts paid...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 105 - Subsection 105(1) | withholding not reduced if no substantive liability | 165 |
Hartrell v. The Queen, 2006 DTC 3548, 2006 TCC 480
The taxpayer was not liable with respect to the second of two periods of time during which the corporation failed to make source deductions given...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(1) | 129 |
Schultheiss v. The Queen, 97 DTC 863 (TCC)
Although two of the taxpayers had signed documents resigning as officers and directors, these documents were not formally filed with the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 51 |
Crossley v. MNR, 91 DTC 827, [1991] 2 CTC 2082 (TCC)
The two-year limitation period commenced running at the time of the appointment of a receiver-manager notwithstanding that the taxpayer still...
Nagy v. MNR, 91 DTC 993, [1991] 2 CTC 2325 (TCC)
The decision of the directors of a corporation, following its filing of a proposal under the Bankruptcy Act, to discontinue its business...
Larocque v. MNR, 91 DTC 899 (TCC)
The issuance of a notice of reassessment was a "proceeding" for purposes of s. 227.1(4), with the result that the making of such a reassessment on...
McConnachie v. MNR, 91 DTC 873, [1991] 2 CTC 2072 (TCC)
In finding that the two-year limitation period commenced running when the corporation was deemed to make an assignment in bankruptcy and a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | 23 |
Peter J. Hawkins v. Minister of National Revenue, 91 DTC 648, [1991] 1 CTC 2424 (TCC)
When a receiver-manager was appointed, the taxpayer ceased to be a director for purposes of s. 227.1(4) by virtue of s. 73 of the Companies Act...
DeWitt v. MNR, 90 DTC 1027, [1990] 1 CTC 2098 (TCC)
Following the continuance of a corporation under the Alberta Business Corporations Act, there was a failure to have the appellant consent to...
Perri v. MNR, 89 DTC 723, [1990] 1 CTC 2071 (TCC)
The taxpayers ceased to be directors for purposes of s. 227.1(4) upon the appointment of a receiver manager notwithstanding that the taxpayers did...
Cybulski v. The Queen, 88 DTC 1531, [1988] 2 CTC 2180 (TCC)
The taxpayer submitted his resignation as an officer and director on May 1, 1984, and was effectively shut out from the company after that point....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) | 171 |
Administrative Policy
88 C.R. - Q.81
An assessment cannot be made against directors once the corporation has been dissolved for two years.
85 C.R. - Q.13
RC does not distinguish between active and passive directors.
Subsection 227.1(7) - 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...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 323 - Subsection 323(8) | 119 |