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Posts tagged "Director’s Liability"

Ahmar v. R. – FCA: taxpayer failed to establish defence of due diligence before Tax Court – appeal dismissed by Federal Court of Appeal
Apr 24, 2020 By Bill Innes
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Précis: The taxpayer’s company, Strong Forming Inc., ran into difficulties as a subcontractor on a subway station project in Toronto. Money was short and it failed to remit HST as the taxpayer used available funds in an attempt to keep the company afloat. The taxpayer was assessed as a director of Strong Forming for the unpaid HST. He appealed unsuccessfully to the Tax Court and, subsequently, to the Federal Court of Appeal. The Court of Appeal agreed with the Tax Court that the taxpayer had not made out a due diligence defence and dismissed the appeal. The parties were given two weeks to attempt to agree upon costs.
Ahmar v. R. – FCA: taxpayer failed to establish defence of due diligence before Tax Court – appeal dismissed by Federal Court of AppealREAD MORE »
Mueller v. R. – TCC: Director who didn’t inquire about unpaid source withholding liable for corporation’s failure to withhold and remit
Jan 09, 2019 By Bill Innes
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Précis: Mr. Mueller was a director of Polgercan Corp. (Polgercan). He understood that the company was winding up its business so arranged to pay the outstanding corporate debts of which he was aware. Subsequently he was assessed as a director in respect of source withholding for three corporate employees. He claimed that he was never aware of the unpaid amounts. The Tax Court found him liable because he had never made reasonable inquiries to determine the state of the employee withholdings. Thus the appeal was dismissed with costs to the Crown, subject to the right of the parties to make submissions on costs within 30 days of the decision.
Mueller v. R. – TCC: Director who didn’t inquire about unpaid source withholding liable for corporation’s failure to withhold and remitREAD MORE »
Le v. R. – TCC: Taxpayer neither a de jure nor de facto director – director’s liability assessment lifted
May 07, 2018 By Bill Innes
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Précis: The taxpayer was assessed for both GST and source deductions for several years in connection with 0780221 B.C. Ltd. (the “Corporation”) on the basis that she had been either a de jure or de facto director of the Corporation during the periods at issue. The Tax Court examined the evidence and was satisfied that the taxpayer had been neither a de jure nor a de facto director of the Corporation at any material time. Thus her two appeals were allowed with costs totaling $1,000 even though these were informal procedure appeals.
Le v. R. – TCC: Taxpayer neither a de jure nor de facto director – director’s liability assessment liftedREAD MORE »
Fox v. R. – TCC: Tax Court rejects director’s “due diligence” defence
Mar 26, 2018 By Bill Innes
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Précis: The taxpayer was assessed as a director for unpaid source deductions and GST. The taxpayer, who was self-represented, argued that he had met the “due diligence” standard in attempting to keep the corporation’s remittances current. The Court did not accept his arguments, finding that he had failed to meet the “stricter standard” the Federal Court of Appeal had propounded in the case of R. v. Buckingham, 2011 FCA 142. As a result the appeals were dismissed. There was no order as to costs since these were all informal procedure appeals.
Fox v. R. – TCC: Tax Court rejects director’s “due diligence” defenceREAD MORE »
Sud v. R. - TCC: Director liable for unpaid GST going back more than a decade - he never resigned
Jul 10, 2017 By Bill Innes
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Précis: Mr. Sud was a director of 1186271 Ontario Inc. (“118”). He was assessed in 2014 for unpaid GST ($17,298.32 ) for the period from January 1, 2003 to December 31, 2005. The evidence was that 118 stopped doing business in 2005 and had filed its last Ontario corporate tax return in 2008. Mr. Sud testified that he believed that the corporation was automatically dissolved 2 years after its failure to file Ontario corporate tax returns and therefore he believed he had ceased to be a director of 118 around 2010. In fact 118 was not dissolved until October 24, 2016 which was two years after the date of the GST assessment of Mr. Sud.
Sud v. R. - TCC: Director liable for unpaid GST going back more than a decade - he never resignedREAD MORE »
Grant v. R. - TCC: Court recommends waiver of penalties and interest - unacceptable processing delay by CRA
Jul 07, 2017 By Bill Innes
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Précis: Mr. Grant was the director of a company, RII Holdings Inc. (“RII”), that went through a long, messy and convoluted bankruptcy proceeding. He attempted to resist liability on the basis of a number of complex defences, including arguing that he had resigned as a director more than two years before the date of the assessment, none of which were accepted by the Court. The Court did take the somewhat unusual step of recommending that the Minister consider waiving penalties and interest because of “unacceptable processing delay on the part of CRA”. As a result the appeal was dismissed but there was no order of costs even though this was a general procedure appeal.
Grant v. R. - TCC: Court recommends waiver of penalties and interest - unacceptable processing delay by CRAREAD MORE »
Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from Bench
Feb 21, 2017 By Bill Innes
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Précis: Mr. Helgesen was assessed for tax and unremitted payroll deductions pursuant to section 227.1 of the Income Tax Act (the “Act”). He unsuccessfully appealed to the Tax Court attempting to establish a due diligence defence. He appealed to the Federal Court of Appeal which held that he had not made out any reversible error by the Tax Court Judge. The appeal was dismissed from the Bench with costs to the Crown.
Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from BenchREAD MORE »
R. v. Chriss - FCA: Unsigned resignations ineffective
Oct 04, 2016 By Bill Innes
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Précis: The Tax Court decision was blogged earlier on this site under the name Gariepy v. The Crown. The nub of the issue before the Tax Court was whether unsigned directors’ resignations prepared by a corporation’s external lawyers were effective to prevent liability for unpaid corporate remittances. The Tax Court held that they were on the facts of the case. The Federal Court of Appeal reversed that decision in a clear policy decision. A bright line test was necessary and unsigned resignations did not, in the Court of Appeal’s opinion, meet such a test. The Crown’s appeal was allowed with costs in both the Court of Appeal and the Tax Court.
R. v. Chriss - FCA: Unsigned resignations ineffectiveREAD MORE »
Helgesen v. R. - TCC: Passive investor/director did not exercise due diligence
Jun 03, 2016 By Bill Innes
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Précis: Mr. Helgesen was a 50% shareholder and one of two directors of 1072519 Alberta Ltd. (the “Corporation”) which operated an OK Tire franchise . The other shareholder and director, Mr. Pyle, ran the Corporation’s day to day operations and his wife acted as corporate bookkeeper. CRA assessed Mr. Helgesen for roughly $200,000 in unremitted source deductions and GST. The Tax Court rejected Mr. Helgesen’s “due diligence” defence holding that he “did not exercise the degree of care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances” [para. [32]]. As a result the appeal was dismissed with costs.
Helgesen v. R. - TCC: Passive investor/director did not exercise due diligenceREAD MORE »
Marra v. R. - TCC: Director’s resignation served on corporation’s lawyer effective
Feb 05, 2016 By Bill Innes
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Précis: Ms. Marra was a director of Sani-Clean Systems Incorporated (“Sani-Clean”) and, as such, was assessed for unremitted GST of Sani-Clean and unremitted amounts under the Income Tax Act. She appealed to the Tax Court which accepted her evidence that she had given her resignation to Claudio Polsinelli, who acted as the lawyer for Sani-Clean, more than two years prior to the date of the assessment. The Crown took the position that the resignation was ineffective.
Marra v. R. - TCC: Director’s resignation served on corporation’s lawyer effectiveREAD MORE »

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