In a recent decision from the Tax Court of Canada in
Achim Bekesinski and Her Majesty the Queen
"), the taxpayer, as director of a corporation,
was personally reassessed by the Minister of National Revenue
("Minister") in the amount $477,546.08 for the
corporation's unremitted income tax, employer
contributions, interest and penalties for its 2001 to 2003 tax
years. This type of Assessment is commonly called a
director's liability assessment.
Director was not liable for Corporation's Tax Debt
The Tax Court of Canada ("Court") held that since
the taxpayer had resigned as a director of the corporation more
than two years after the Minister's assessment, the Minister
was statue barred from raising the director's liability
Brief Overview of the Facts
In 1992 the taxpayer purchased D.W. Stewart Cartage Ltd. (the
"Corporation"), a general cartage, trucking and
warehousing company. The taxpayer served as a director of the
Between 2005 and 2011, the Corporation had issues with the tax
authorities and did not comply with its tax obligations. The
taxpayer, a listed director of the Corporation, received numerous
letters from the Canada Revenue Agency (CRA) warning him that he
could be held personally liable for the corporation's tax debts
as a director of the Corporation. He did not notify the CRA
at that time that he had resigned until much later when he received
a director's liability assessment.
On October 15, 2010 the Minister issued a Notice of Assessment
to the taxpayer for unremitted income tax, employer contributions,
interest, and penalties in the amount of $477,546.08.
The taxpayer argued that he had resigned as director of the
Corporation on July 20, 2006 by way of a Notice of Resignation and
that the Minister was statute barred in its assessment against him
since it has been more than two years since his resignation.
The Minister argued that the taxpayer was in fact a director and
that the taxpayer had backdated the resignation to qualify for the
exception. To prove this point, the Minister attempted to
adduce as evidence an "ink date test" to determine the
authenticity of the Notice of Resignation to be conducted by a
Canadian Border Services Agency ("CBSA") forensic
Fortunately for the taxpayer, the ink date test was
excluded by the Court because the Minister had failed to plead as
an assumption the authenticity of the Notice of Resignation.
In other words, since the Minister did not assume in
her pleadings that the Resignation was backdated or
inauthentic, the Minister was precluded from relying on the ink
The Court commented that although there had been some
inconsistency in the taxpayer's testimony, none were glaring,
and it was generally corroborated by that of other
Campbell, J. concluded that while her belief was that the
Resignation was backdated, it was not open to the Court to review
the available evidence on that point due to the deficiencies in the
Minister's pleadings. Accordingly, the taxpayer had
only to prove that he was not a director of the Corporation during
the relevant taxation years and not the authenticity of his
Resignation, a much more difficult case to meet.
The taxpayer in Bekesinski avoided director's
liability for corporate tax debts in large part due to litigation
missteps by the Minister, a mistake unlikely to be repeated.
It is highly advisable for corporate directors to carefully
document their resignations so as to avoid potential future
director's liability tax assessments by the CRA and challenges
to the authenticity of the resignation.
Solhi is a tax lawyer and partner at TaxChambers LLP,
a boutique tax law firm in Toronto, Canada. The views and opinions
are those of the author and do not necessarily represent the views
and opinions of TaxChambers LLP. The information contained herein
is general in nature and based on authorities that are subject to
change. Applicability to specific situations is to be determined
through consultation with your tax adviser.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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