Tax Court cases are often very interesting to understand how the position the legal profession takes on a matter can differ greatly from that of the CRA. In Hirjee v. The King, the CRA took the position that a corporate director failed to exercise their due diligence for remitting tax collected under the ETA and therefore was liable under section 323 of the Act for the amounts outstanding. The twist here is that the director was undergoing mental health issues at the time that the tax went unremitted and the question was not as cut and dry as it seemed.
The key passage in this case is:
‘According to Justice Bédard, the director’s condition, although a relevant factor, would have been insufficient to relieve liability. By hiring a manager, the director took positive and concrete steps to remit GST. In doing so, the Court determined that he exercised his duty of care since a reasonably prudent person placed in comparable circumstances would not have done more to prevent the corporation’s failure to remit GST”
The conclusion to draw here is that the standard was met where the person, even in their precarious state, took a prudent and reasonable step to meet their obligations, regardless of the outcome.
If you have been assessed for tax owing/unremitted and the question of due diligence is in question, this is a good case to look at for the standard. If you need someone to help you appeal to the CRA, take a free consultation with any of our ZheroTax experts so that they can help you determine your likelihood of a successful appeal.