Tax Court of Canada


Amount of assessments reduced to amount of relevant Federal Court certificates

Director was controlling mind of three companies who did engineering work for developer. Developer did not pay its bills on timely basis, resulting in three companies taking collection actions, and eventually executing lien. Minister of National Revenue assessed director under s. 323 of Excise Tax Act (Can.), for Goods and Services Tax (GST) that company TE Inc. failed to remit and $86,222.48 in GST that company 306 Canada Inc. (TM) failed to remit. Director appealed. Appeals allowed in part. Amount of assessments reduced to amount of relevant Federal Court certificates. Certificate that Minister registered with Federal Court of Canada for TM’s unremitted net GST was $11,896.19 less than amount assessed. Section 323(2)(a) of Act provided that Minister may not assess amount in excess of amount of Federal Court certificate. Director knew that three companies were facing significant cash flow issues due to developer failing to pay invoices and chose not to make remittances, believing that developer would eventually pay and remittances could be made in future. Director took no steps to prevent failure by three companies to make remittances. Failure to make remittances in belief that failure could be corrected in future did not constitute defence under s. 323(3) of Act. While director may not have been able to foresee events that occurred with respect to developer’s contract, he was person who made decision not to pay certain of three companies’ accounts payable, including remittances. Director was not entitled to rely upon due diligence defence in s. 323(3) of Act.

Maxwell v. R. (Mar. 25, 2015, T.C.C. [General Procedure], Steven K. D’Arcy J., File No. 2011-2668(IT)G, 2011-2669(GST)G, 2011-2687(IT)G, 2011-2688(GST)G) 250 A.C.W.S. (3d) 711

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