I put my life and savings into my incorporated business and it failed. Now the tax Agency says I owe for something called Director Liability? I have no money or assets to pay such a debt…what can I do?
This is a fairly common scenario. Simply stated, Director’s Liability is the liability that can be created against a director(s) in situations where the corporation that he or she directed, failed to pay or remit such taxes as net sales tax, GST/HST amounts collected and payroll source deductions taken. The Canada Revenue Agency and other tax authorities by way of the legislation that they administer views the director(s) as the person(s) responsible to ensure that these monies are sent to the tax authority by their corporations; when they are not, they can be held jointly, severally and solely responsible for the remitting of these amounts.
Your situation may be unique and generally speaking if you lack the ability or resources to pay these amounts immediately or in the future, they do not assess you or make your liable. If they do decide to make you as a director liable, they will need to take specific steps to do that.
As for your options, these type of liabilities can usually be addressed in a bankruptcy filing or a proposal made under the Bankruptcy and Insolvency Act. It is best if you promptly seek the guidance and advice of a Licensed Insolvency Trustee in these situations as the Trustee is best able to explain and assist your options.