ARTICLE · 16 SEPTEMBER 2021

Directors' Liability And Section 160 Assessments

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Under Canadian tax law, directors of a corporation can be held personally liable for certain components of a corporation's tax debt which the corporation cannot pay, such as in the case of an insolvency.

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Directors can be held liable for a corporation's debt

Under Canadian tax law, directors of a corporation can be held personally liable for certain components of a corporation's tax debt which the corporation cannot pay, such as in the case of an insolvency.

Generally speaking, corporations are required to collect payroll source deductions and GST/HST and remit them to the Canada Revenue Agency (CRA). These amounts collectively are referred to as Trust Amounts as they are being held in trust by a corporation on behalf of the CRA.

Oftentimes when a corporation runs into financial trouble, they fail to remit these source deductions and GST/HST amounts. Instead they use them to continue to make the payroll or pay suppliers.

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