During difficult economic times, there is a tremendous
temptation on the part of struggling business owners to finance the
business by not remitting the required amounts for source
deductions and HST. Not surprisingly, this decision can result in
adverse financial consequences for the directors and secured
creditors of the business.
It may seem like an easy out at the time, as these remittances
are based on a self-assessing tax system that will not immediately
recognize a less-than-full payment. Indeed, the pandemic has
assisted in this regard as Canada Revenue Agency (CRA) stopped
doing the usual audits that would typically identify under- or
no-remittance situations.
However, the word on the street is that CRA is hiring more
collectors and more personnel to clear the accumulated backlog of
audits. This is bad news for any business owner who has been hoping
that the taxman will be preoccupied with bigger fish. Not so. CRA
will come knocking at some point.
