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GST — director's liability (restaurant owner)

My client had been the owner and director of a corporation that ran a restaurant. She left day-to-day operations in the hands of a business manager. The restaurant went out of business owing some $20,000 in unremitted GST. Several years later, Revenue Canada assessed my client for the corporation's GST plus interest and penalty, totalling some $30,000.

The client came to me for help, and I filed a detailed Notice of Objection on her behalf. The Revenue Canada appeals officer was unwilling to go into the facts in any detail, and confirmed the assessment.

I filed an appeal on my client's behalf to the Tax Court of Canada. Long in advance of a court hearing date, my client and I met with Department of Justice counsel (Revenue Canada's lawyer) to go through the facts of the case in detail. I obtained documentary evidence including a letter from the former business manager confirming that my client had instructed him to remit the GST on a timely basis each quarter.

After listening to my client's explanations and my arguments, Department of Justice counsel agreed, and recommended to her client (Revenue Canada) that the assessment be dropped. It was, and Revenue Canada agreed to the appeal being allowed without a court hearing.

Problem vanished!

(1996)