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

A CRA Director Liability Audit is one of the most serious investigations that business owners and directors can face. Under Canada’s Income Tax Act and Excise Tax Act, corporate directors can be held personally liable for unremitted payroll deductions, GST/HST, and source deductions — even after a corporation ceases operations or enters bankruptcy. When a corporation falls behind on remittances, CRA’s Collections Division may issue a “Director’s Liability Notice,” turning a corporate debt into a personal legal obligation. Mackisen CPA Montreal helps directors respond, defend, and protect their personal assets against these high-risk assessments.

Legal Foundation

Law: Income Tax Act s. 227.1 — director’s liability for unremitted source deductions; Excise Tax Act s. 323 — personal liability for unpaid GST/HST; Tax Administration Act (Québec) arts. 40–44 — similar liability for unremitted QST, HSF, and QPP.
Jurisprudence: Soper v. Canada (1997 FCA) — established that directors are personally liable if they fail to exercise due diligence in ensuring remittances are made.

Why CRA Pursues Directors

The CRA treats payroll and sales taxes as trust funds, collected on behalf of the government. Once collected, these funds no longer belong to the company. If they are used for operations, salaries, or other expenses, CRA considers this a breach of fiduciary duty. Director liability extends to current, former, and de facto directors — including those whose names appear on resolutions or bank accounts.

Learning insight: Signing one corporate document can make you legally responsible for everything that follows.

When CRA Can Assess Directors Personally

• The company fails to remit payroll deductions, GST/HST, or QST.

• CRA proves that the director authorized, permitted, or acquiesced in the failure.

• The corporation is insolvent or dissolved without paying trust taxes.

• Two years have not yet passed since the person ceased being a director.

Mackisen CPA Montreal intervenes at the earliest stage to prevent a Director’s Liability Notice (DLN) from maturing into a personal garnishment or lien.

The Mackisen CPA Director Liability Defense Process

1. Audit File Review: We analyze all CRA and Revenu Québec account statements, notices, and correspondence.

2. Corporate Reconstruction: We rebuild payment timelines and show reasonable diligence or financial impossibility.

3. Due-Diligence File Creation: Our CPA team compiles evidence (emails, resolutions, payment attempts) showing that the director took reasonable care.

4. Negotiation with CRA Legal: We correspond with the CRA’s legal recovery unit to seek relief or payment arrangements.

5. Court-Ready Documentation: If needed, Mackisen CPA collaborates with legal counsel to prepare a Federal Court appeal under s. 227.1(2).

Learning insight: CRA doesn’t need to prove intent — it only needs to show you didn’t act fast enough. That’s why timely documentation is your strongest defense.

Common Triggers for Director Liability Audits

• Missed payroll or GST remittances during a company cash-flow crisis.

• Corporate bankruptcy or voluntary dissolution with unpaid trust taxes.

• Directors who resigned informally but failed to file a notice of resignation.

• CRA collection agents unable to locate current corporate officers.

• Successor corporations carrying the same business after closure.

Learning insight: CRA looks for continuity, not paperwork. Even if you think you’ve resigned, your name on one late remittance can still link you to liability.

How Mackisen CPA Prevents Personal Assessments

• Conducts a full forensic reconciliation of corporate remittance history.

• Demonstrates due diligence — that the director took reasonable steps to ensure compliance.

• Provides legal evidence of resignation or loss of control (e.g., shareholders’ meeting minutes).

• Negotiates settlements or payment arrangements to avoid court action.

• Coordinates Taxpayer Relief applications to waive penalties and interest.

Learning insight: Documentation turns “failure to remit” into “reasonable diligence.” Mackisen CPA ensures your efforts are proven and preserved.

Financial and Legal Consequences of Inaction

Once CRA issues a Director’s Liability Notice, the amount owed becomes a personal debt collectible by wage garnishment, property seizure, or liens. Québec’s ARQ has identical powers under LAF art. 40–44. A director may face frozen accounts, intercepted refunds, or credit damage if no formal defense is filed.

Learning insight: Ignoring a CRA liability notice doesn’t buy time — it accelerates enforcement.

SEO Optimization and Learning Value

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Learning insight: CRA and ARQ both follow one principle — trust taxes belong to the Crown. Mackisen CPA’s role is to protect the people behind the company who acted in good faith.

Real Client Success

• A Montréal restaurant owner avoided a $76,000 personal assessment after Mackisen CPA proved the company’s remittance failure was due to an unexpected bank freeze.

• A construction-company director had a $120,000 CRA garnishment lifted after our CPA team reconstructed remittance logs proving due diligence.

• A dissolved corporation’s former director was cleared of liability when we demonstrated that control was transferred more than two years before CRA issued the DLN.

Why Mackisen CPA Montreal

Mackisen CPA Montreal is Québec’s leading authority in director-liability defense. Our bilingual CPA auditors combine tax law, accounting, and negotiation expertise to protect business owners from personal exposure. We liaise directly with CRA Collections, ARQ Legal Affairs, and external counsel to deliver immediate relief and long-term compliance.

Learning insight: Being a director means carrying both opportunity and responsibility. Mackisen CPA ensures that your responsibility never turns into personal risk.