CRA Director Liability Audit — Montreal CPA Firm Near You: Protect Your Personal Assets

A CRA Director Liability Audit is one of the most serious compliance actions a business leader can face. When a corporation fails to remit trust funds such as payroll deductions, CPP, EI, GST/HST, or QST, the Canada Revenue Agency and Revenu Québec can hold its directors personally liable.
Mackisen CPA Montreal defends corporate directors by reconstructing payment records, documenting due diligence, and negotiating with tax authorities to prevent personal asset exposure.

Legal Foundation

Law: Income Tax Act s.227.1 — director liability for unremitted payroll deductions; Excise Tax Act s.323 — director liability for unpaid GST/HST; Tax Administration Act (Québec) arts.40–44 — similar trust-fund liability for QST and source deductions.
Jurisprudence: Soper v. Canada (1997 FCA) — confirmed directors can avoid personal liability if they show reasonable steps were taken to ensure remittances were made.

Learning insight: CRA doesn’t need to prove intent — only omission. Mackisen CPA proves diligence, documentation, and defense.

Why CRA Pursues Directors

When corporations fail to remit trust funds, CRA assumes directors controlled financial operations and failed to act. CRA may issue Director Liability Notices (DLNs) up to two years after a director’s resignation.

Common audit triggers include:

• Late or missing payroll, GST/HST, or QST remittances.

• Corporate bankruptcy or insolvency with unpaid taxes.

• Directors listed on corporate filings but unaware of arrears.

• Missing resignation or meeting records proving non-involvement.

• Evidence that taxes were used to fund operations or wages.

Learning insight: Signing authority is legal responsibility — even if you didn’t sign the remittance cheque.

CRA’s Director Liability Audit Process

1. Preliminary Review: CRA gathers corporate remittance records, T4 summaries, and bank statements.

2. Assessment Proposal: CRA issues a Notice of Intended Assessment under s.227.1(2).

3. Objection Opportunity: The director has 90 days to submit due-diligence proof.

4. Personal Assessment: CRA transfers the corporate debt to the director if evidence is insufficient.

5. Collection Action: CRA can garnish wages, freeze accounts, or place liens on property.

Learning insight: CRA audits timelines — not just transactions. Mackisen CPA ensures your actions are documented within those timelines.

Mackisen CPA’s Director Liability Defense System

1. Timeline Reconstruction: Rebuild remittance records, bank transactions, and payment correspondence.

2. Due-Diligence File Creation: Compile board minutes, financial reports, and communications proving oversight.

3. Resignation Validation: Confirm and document resignation dates to invoke the two-year statutory limitation.

4. Negotiation and Legal Coordination: Collaborate with counsel to present CRA with reasonable-diligence evidence.

5. Taxpayer Relief Requests: File under s.220(3.1) ITA to reduce penalties or interest for extraordinary circumstances.

Learning insight: CRA collects assumptions — CPAs collect evidence. Only one stands up in court.

Financial Risks of Director Liability

• 100% personal liability for unremitted trust funds.

• Interest and penalties compounding until payment or defense accepted.

• Seizure risk on personal property and bank accounts.

• Credit-rating damage and garnishment exposure.

Learning insight: Director liability doesn’t stop when the company closes — it stops when diligence is proven.

Common Mistakes Directors Make

• Assuming delegated staff handled remittances without oversight.

• Failing to document financial discussions or meeting minutes.

• Resigning informally without filing legal notice.

• Ignoring CRA collection letters or DLNs.

Mackisen CPA Montreal intervenes early to demonstrate proactive management, protecting both corporate and personal finances.

Learning insight: CRA punishes silence, not setbacks. Mackisen CPA ensures your record speaks for itself.

SEO Optimization and Learning Value

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Secondary Keywords: Revenu Québec director liability, Mackisen CPA defense, payroll remittance CRA audit, due-diligence documentation, tax director protection Montreal.

Learning insight: Strong digital authority mirrors strong audit defense — both require facts, structure, and transparency.

Real Client Success

• A Montréal retail director avoided $110,000 in personal liability after Mackisen CPA proved remittances were delayed due to bank errors, not negligence.

• A construction executive cleared a $240,000 DLN when we documented two years of board oversight and cash-flow correspondence.

• A healthcare director reduced penalties by 80% after Mackisen CPA submitted a full due-diligence package under ITA s.227.1(3).

Learning insight: CRA cancels liability when directors show control, not perfection. Mackisen CPA builds that control in writing.

Why Mackisen CPA Montreal

Mackisen CPA Montreal combines 35 years of experience in CRA and ARQ audit defense, specializing in director liability, payroll compliance, and trust-fund recovery. Our bilingual CPAs, forensic accountants, and legal partners deliver fast, fact-based defense strategies that protect leadership credibility and financial stability.

Learning insight: Director liability is about leadership accountability — Mackisen CPA ensures your leadership is documented, defensible, and respected.