Statutory Sources Of Liability

Directors of corporations (whether federal, provincial, public, private or non-profit) are responsible for supervising the management of the affairs of the corporation. In the course of carrying out those responsibilities, directors are exposed to a growing number of statutory liabilities.

Directors have obligations to manage the affairs of their companies and govern themselves in accordance with the incorporating statutes for their companies. In addition to these obligations, directors have specific statutory obligations.

Of all the liabilities that directors face, those relating to tax or source deduction remittance are the ones most likely to materialize. If there has been a failure to remit or withhold tax under the Income Tax Act (Canada) (ITA), directors are jointly and severally liable with their companies for payment of tax, interest and penalties. Section 227.1(1) of the ITA provides that, if a corporation has failed to deduct, withhold, remit or pay