Director's Personal Liability Assessments: 'Due Diligence' Requires Timely CRA Payments

As we have blogged here and here, dealing with and appealing Director's Liability Assessments for GST/HST purposes or source withholding purposes on the Income Tax side is generally an uphill battle.

The Tax Court's recent decision in Donaldson v. The King (2022 TCC 159) underscores that a corporation dealing with business down-turns by holding off on paying the CRA its required remittances is a losing strategy!

Background

Section 323(1) of the Excise Tax Act ("ETA") provides that the directors of a corporation are jointly and severally liable together with the corporation for any amounts of GST/HST that that a corporation fails to remit to the Minister as and when required. Similarly, section 227(1) of the Income Tax Act ("ITA") expands this liability to include various source deductions (i.e., for income taxes, and as required under the Employment Insurance Act and the Canada Pension Plan).