Tax court of Canada | Tax | Income tax | Administration and enforcement
Taxpayer entered into agreement with long-time employee and her husband after deciding to acquired new salon. Long-time employee’s husband prepared articles of incorporation for new corporation and he and taxpayer signed these articles, each as “incorporator”, in early January 2007. Husband also prepared 10 page “Partnership Agreement” which taxpayer signed. In 2009 taxpayer’s interest was bought out by husband. Taxpayer was assessed under s. 323 of Excise Tax Act for unremitted net GST for annual reporting periods ending December 31, 2007, 2008, 2009, 2010 and 2011 totalling $35,659. Taxpayer was assessed under s. 227.1 of Income Tax Act for unremitted source deductions respecting corporate taxation years of 2007, 2008 and 2009 totaling $15,675. Taxpayer appealed. Appeal allowed and assessments vacated. Taxpayer was neither de jure nor de facto director of corporation. Director’s liability assessments were invalid. There was no actual “incorporation agreement” in situation, which statutorily and unavoidably led to conclusion that taxpayer was not “incorporator” as defined in s. 1 of Business Corporations Act (BCA) which in turn led to invalidity of any designation that taxpayer was director. Fact that taxpayer signed her name over designation of “Director” did nothing to alter these conclusions. Section 413 of BCA did not apply. At no time did taxpayer conduct or hold herself out as director. Taxpayer was not de facto director of corporation.
Le v. The Queen (2018), 2018 CarswellNat 1458, 2018 CarswellNat 1655, 2018 TCC 65, 2018 CCI 65, B. Russell J. (T.C.C. [Informal Procedure]).