If you are on the Board of Directors....

January 16, 2013 at 5:19 PM

Some points to consider with respect to director liability include:

1.    The Excise Tax Act and the Income Tax Act hold directors personally liable for unremitted GST/HST, payroll withholdings, and interest and penalties.  Directors are not necessarily liable for unpaid tax of the corporation.

                        2.    A director is not defined in the Act and could include both de jure directors (lawfully and validly appointed according to corporate legislation) and de facto directors (persons that are acting as directors).

3.    CRA may only take action against the director if they do so within two years of the resignation of the director.  Therefore, resignation is very important as it limits liability and starts a two-year limitation period running.

4.    It is important to stop acting as a director or manager, after resignation, such as not signing corporate documents.  Also, appointing a new director further establishes that you have resigned your position as a director.

Legal advice may be needed.

Tax Tips & Traps 2012