The most common director obligations are those imposed under the Federal Income Tax Act and Excise Tax Act. Under the Income Tax Act, directors are personally liable for payroll source deductions that are withheld but not remitted to the Canada Revenue Agency (“CRA”). Under the Excise Tax Act, directors are personally liable for net HST or GST that has been collected but not remitted to CRA. Directors do not generally have personal liability for corporate income taxes owing by the Company.
Other Federal or Provincial acts can impose liability on directors, including liability for environmental damage related to company activities, unpaid wages and vacation pay and workers compensation premiums.
It is possible to settle personal debts of a corporate director in a successful Proposal under the BIA but only if those debts are imposed by a Federal or Provincial legislation against directors. If the director has liability because the director signed a personal guarantee of a company debt, the Proposal will not generally discharge this obligation.