The director of a corporation can be held liable for any unpaid GST/HST and even payroll remittances.
The only way that the CRA can not assess is:
- The CRA registers a certificate for the remitted amounts
- The corporation is currently being dissolved or has already become dissolved
- The corporation is in the process of filing for bankruptcy or has already filed for bankruptcy
Even if all the above are met, the director will still have to prove that he/she has done everything possible to prevent any unpaid amounts.
There is a two-year limitation period where the CRA can not any type of action against a director if he/she has stopped being a director for a corporation. The two-year limitation period begins as soon as the director resigns, in which, the director has to provide a handwritten letter to the corporation.
When a corporation is dissolved, everyone who was a director ceases to be at the date of dissolution. Which than commences the two-year liability limitation period. If the dissolution of the corporation is voluntary, meaning all parties involved have decided that the corporation is no longer feasible, the corporation must satisfy any debts owing and obligations. Remaining properties are split between shareholders and than the company can be dissolved.
Involuntary dissolution occurs mostly because a corporation has failed to file their corporate tax returns for whatever reason. If this occurs, the corporation can be revived by filing any outstanding tax returns and than filing an article of revival.
This is general comment, and you should contact Tax Partners for any questions by sending an email to [email protected] or (905) 836-8755.
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