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

A CRA Director Liability Audit is one of the most serious forms of tax enforcement in Canada. It holds corporate directors personally responsible for unpaid payroll deductions, CPP/EI, and GST/HST remittances owed by their companies. CRA treats these as trust funds — money withheld on behalf of the government. If they are not remitted, CRA can assess directors individually.
Mackisen CPA Montreal represents directors across Québec and Canada during CRA and Revenu Québec liability audits, building a defense that demonstrates due diligence, financial control, and legal compliance.

Legal Foundation

Law: Income Tax Act s. 227.1 (Director’s liability for unremitted source deductions); Excise Tax Act s. 323 (GST/HST director liability); Tax Administration Act (Québec) arts. 40–44 (trust fund obligations for QST, HSF, QPP).
Jurisprudence: Soper v. Canada (1997 FCA) — established that directors can avoid liability by showing they exercised “reasonable diligence” to ensure remittances were made.

Learning insight: CRA doesn’t punish directors for bad luck — only for inaction. Documentation of oversight is your strongest defense.

Why CRA Pursues Director Liability

When corporations miss payroll or GST remittances, CRA assumes directors controlled the company’s finances and failed to act. These trust amounts belong to the government, not the business. Director liability applies to:

• Current, former, or de facto directors.

• Individuals signing corporate documents, payroll, or bank transactions.

• Directors who resigned less than two years before the assessment date.

Learning insight: Signing authority creates responsibility. A CPA ensures your actions show diligence, not default.

Common Triggers for Director Liability Audits

• Missed payroll deductions or GST/HST remittances.

• Corporate bankruptcy or dissolution without payment of trust funds.

• Directors listed on resolutions but unaware of non-remittance.

• Financial distress where taxes were deferred for other payments.

• Failure to maintain books, records, or remittance proofs.

Mackisen CPA Montreal reconstructs the financial timeline and demonstrates that directors acted responsibly — proving control, effort, and good faith.

Learning insight: CRA assumes guilt by omission. Mackisen CPA builds the record that proves diligence by commission.

What Mackisen CPA’s Director Liability Defense Includes

1. Corporate Reconstruction: We rebuild all remittance timelines, payroll records, and trust-fund statements.

2. Due-Diligence File Creation: Document your actions, communications, and attempts to rectify issues.

3. Resignation Date Verification: Prove statutory expiry of liability under the two-year rule.

4. CRA Negotiation: Engage CRA’s Legal and Collections Divisions to challenge or limit personal assessments.

5. Taxpayer Relief Coordination: Apply for penalty or interest waivers under s. 220(3.1) ITA.

Learning insight: Liability defense isn’t about what happened — it’s about what you can prove you did to prevent it.

CRA Audit Process for Director Liability

1. Information Request: CRA issues a notice seeking corporate records and director details.

2. Preliminary Finding: CRA evaluates control and due diligence.

3. Director’s Liability Notice (DLN): CRA formally transfers corporate debt to the director personally.

4. Objection Period: Director has 90 days to dispute with documentation.

5. Enforcement: CRA can garnish wages, freeze accounts, or place property liens.

Learning insight: Silence during the audit phase becomes evidence against you. Mackisen CPA ensures your voice — and your proof — are heard clearly.

Financial Impact of a Director Liability Assessment

• 100% personal liability for unremitted trust funds.

• Interest and penalties dating back to original due dates.

• Credit rating damage and liens on personal property.

• Garnishment or asset seizure by CRA or ARQ enforcement divisions.

Learning insight: Corporate dissolution doesn’t erase payroll debt — it transfers it to the people in charge.

SEO Optimization and Learning Value

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Learning insight: SEO authority and legal authority share one principle — credibility built on evidence. Mackisen CPA provides both.

Real Client Success

• A Montréal manufacturing director avoided $210,000 in personal liability after Mackisen CPA proved timely payments and banking constraints beyond control.

• A retail business owner’s Director Liability Notice was withdrawn after we documented resignation two years before the arrears period.

• A construction director reduced penalties by 80% when our CPA team demonstrated due diligence under s.227.1(3).

Learning insight: CRA withdraws liability when directors demonstrate diligence — not perfection.

Why Mackisen CPA Montreal

Mackisen CPA Montreal is Québec’s trusted expert in CRA and Revenu Québec director-liability defense. Our bilingual CPA team combines legal precision, accounting accuracy, and direct communication with CRA’s Collections and Legal Services.
We protect both the corporation’s records and the individual’s reputation, ensuring directors are treated fairly and their evidence is fully documented.

Learning insight: Leadership carries liability — unless it carries documentation. Mackisen CPA builds that documentation for you.