The directors may be held personally liable for paying any unremitted GST/HST and payroll deductions of the Corporation (Corporate tax is typically excluded from the director liability). As a director, you are also at risk of being assessed penalties and interest on these unremitted items. To protect yourself, you must exercise due diligence by taking the steps a responsible individual in a similar situation would take to ensure the corporation withholds, deducts and remits the correct amounts due. You must be able to show you took reasonable steps such as calling on management or financial officers to report regularly on the above and reviewing confirmations of payments made. To hold a director personally liable, CRA must show all of the following:

• The director did not exercise due diligence to prevent a failure to deduct, withhold or remit appropriately
• The assessment of personal liability must be issued within two years of the time the director ceases to be a director
• CRA must demonstrate an inability to collect directly from the corporation

If you are thinking of becoming a director, be sure you understand your responsibilities and what withholdings and remittances are required of the corporation. As a director, ensure that you exercise and document your due diligence. When you cease to be a director, it is important that you legally resign under the authority of which the corporation is incorporated such as the Canada Business Corporations Act.