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ARTICLE · 26 FEBRUARY 2016

Financial Institutions, It's Time To Assert Your Rights!

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The era when financial institutions were compelled, upon mere receipt of a notice to pay, to remit to the government any amount of money they held on behalf of an insolvent tax debtor, is perhaps over.

CanadaFinance and Banking
Reynald Auger
Reynald Auger
Stéphanie Fortier-Dumais
Stéphanie Fortier-Dumais
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The era when financial institutions were compelled, upon mere receipt of a notice to pay, to remit to the government any amount of money they held on behalf of an insolvent tax debtor, is perhaps over.

For it is now incorrect to assume that no valid grounds can be set up by a financial institution against the authority issuing such a demand for payment, provided the tax debtor is also indebted to the financial institution.

In November 2014, the Federal Court of Appeal upheld a decision of the Tax Court of Canada1 allowing the appeal of Caisse Desjardins de Québec (the "Caisse") of an assessment made against it under subsection 317(3) of the Excise Tax Act.

The Caisse had granted the tax debtor in question a line of credit, from which amounts drawn down were repayable on demand. The Crown, which was owed sales taxes (GST and PST) by the tax debtor, served the Caisse with a written requirement to pay the amounts owing pursuant to subsection 317(3) of the Excise

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