CRA and director liability for HST
If my company goes bankrupt and owes HST I understand they will come after me personally. If I claim personal bankruptcy can they go after our personal house even if it is only in my wife’s name?
1 Answer
Yes, if you are incorporated and are the director of your corporation, you are personally liable for any unremitted HST.
You mentioned “if your company goes bankrupt”. For a company to go bankrupt you actually have to take the steps of finding a Licensed Insolvency Trustee to help you file a corporate bankruptcy and sign the necessary paperwork. A company doesn’t go bankrupt by itself.
If you actually file a corporate bankruptcy, CRA has 2 years from the date of the company’s bankruptcy filing date to come after you personally. If they do not, then your personal liability is statute barred.
Now, regarding the family home – was it in your wife’s name before you fell into HST arrears with CRA? For example, did you transfer your interest in the family home to your wife before you opened up your business?
If the answer is “yes”, then filing for personal bankruptcy will not affect the home.
If on the other hand, you transferred your interest in the home to your wife with the intention of hiding it from your creditors because you knew you’re in financial trouble, then filing a bankruptcy will affect your home. Your Trustee would have to set aside the transfer by way of a court order and liquidate your interest in the home for the benefit of your creditors.
Your Answer
1 Answer
Yes, if you are incorporated and are the director of your corporation, you are personally liable for any unremitted HST.
You mentioned “if your company goes bankrupt”. For a company to go bankrupt you actually have to take the steps of finding a Licensed Insolvency Trustee to help you file a corporate bankruptcy and sign the necessary paperwork. A company doesn’t go bankrupt by itself.
If you actually file a corporate bankruptcy, CRA has 2 years from the date of the company’s bankruptcy filing date to come after you personally. If they do not, then your personal liability is statute barred.
Now, regarding the family home – was it in your wife’s name before you fell into HST arrears with CRA? For example, did you transfer your interest in the family home to your wife before you opened up your business?
If the answer is “yes”, then filing for personal bankruptcy will not affect the home.
If on the other hand, you transferred your interest in the home to your wife with the intention of hiding it from your creditors because you knew you’re in financial trouble, then filing a bankruptcy will affect your home. Your Trustee would have to set aside the transfer by way of a court order and liquidate your interest in the home for the benefit of your creditors.