Under Canadian tax law, directors of a corporation can be held personally liable for some of a corporation’s tax arrears. Generally speaking, corporations are required to collect payroll source deductions and GST/HST and remit them to the Canada Revenue Agency (CRA).  These amounts collectively are referred to as Trust Amounts as they are being held in trust by a corporation on behalf of the CRA. 

Oftentimes when a corporation runs into financial trouble or mismanagement, they fail to remit these source deductions and GST/HST amounts.  Instead they use them to continue to make the payroll or pay suppliers. 

When the CRA collector believes that a corporation will be able to service this arrear they start proceedings to have the directors of the corporation be held personally accountable for the bill.

However, certain conditions must be met for the CRA to go after an individual director.