Canada Case Law

Newhook v. The Queen

Court

Tax Court of Canada

The Appellant failed to rebut the Minister’s factual assumptions and produced no documentary evidence to displace the CRA’s accounting and retrievals; the CRA evidence established the $29,075.41 liability; the Appellant did not take proactive, preventive steps or exercise sufficient oversight of his accountant and thus did not meet the objective due diligence standard under s.323(3); accordingly the statutory director liability applies and the appeal is dismissed.

Source excerpt

• Director liability under s.323
• Due diligence defence
• Assessment correctness
• Reassessments
• Tax remittance obligations

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Sheck v. The Queen

Court

Tax Court of Canada

Director liability under s.323(1) arises as of the corporation's failure to remit and paragraph 323(2)(a) is a procedural condition for assessing that director; accordingly the husband was a tax debtor in respect of amounts that arose before August 18, 2008 and the Minister permissibly assessed the appellant under s.325(2); additionally there was insufficient evidence of a legal obligation to repay the alleged $12,000 so the transfer lacked adequate consideration and the assessment is valid.

Source excerpt

• Non-arm's length transfers
• Director's liability under part ix
• Assessment under subsection 325(2)
• Consideration for transfer
• Timing of liability

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439288 B.C. Ltd. v. Marmon Financial Management Co. Ltd.

Court

Supreme Court of British Columbia

The court held Sharol Briere personally liable for funds diverted from Marmon to Graywood to defeat creditors, and awarded special costs plus further accounting directions.

• Fraudulent conveyance act
• Fraudulent preference act
• Directing mind doctrine
• Personal liability for tortious acts
• Garnishment
• Tracing and recovery of diverted funds

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Penta v. The Queen

Court

Tax Court of Canada

Appellant failed to demonstrate the requisite care, diligence and skill under s.227.1(3): he took no steps to ensure remittances or to send T4 copies, was aware of the failures and awaited collection of receivables rather than safeguarding Crown monies; the bankruptcy of the contractor did not excuse the failure; therefore the s.227.1 assessment against the director is upheld.

Source excerpt

• S.227.1 liability
• Source deductions
• Directors' due diligence
• Assessment review

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