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| *Ostroff, Fair and Company>>>Canada Taxes |
Once a company closes are they liable for thier debt? Specifically to the Gov't of Canada? |
I work for a company that used to have a company by another name,. That company closed over two years ago. However I received an invoice from teh Gov't of Ontario regarding taxes in 2004 with interest. Do I have to pay this invoice? It depends on what type of tax the Ontario Government is charging the company for. If the charge is for taxes withheld from employees or collected from customers (sales tax) and not remitted, then the directors of the company (whether or not the company currently exists) may be personnally liable for the tax. The reasoning behind this is that these types of taxes are considered to be trust funds in favour of the Government and therefore do not consitute an asset of the company that can be used to settle other company debts. There have been many court cases of late in Canada regarding the due diligence (or lack thereof ) of company directors where companies under financial stress have failed to remit taxes to various levels of government that have either been withheld from employees or collected from customers. Canadian companies that have ceased to operate require a tax clearance certificate from all relavent levels of government before they are allowed to surrender their charter and disolve. As long as the company exists, (albeit dormant) the shareholders and directors remain on the hook for its debts. Needless to say there is a practical issue to be considered here that is related to the materiality of the amount involved. I suspect that the level of effort to collect unpaid amounts on the part of the government seeking the funds would be a function of the cost of pursuing the debtor. If this pursuit extends to a juristication outside of Canada the amount involved would have to be substantial before any substantial legal effort to collect would be embarked upon. I hope this is helpful. Tim H If the cpmpany went bankrupt then the answer is no. Canadian baknruptcy laws eradicate all debt including PST, GST, witholding tax and income tax. In the USA that is not the case. You give that to your lawyer. If the debt was not discharged by something like a bankruptcy, it's probable. As long as the company reforms as a seperate and different entity they are not likey to owe the money. When a Ltd. company closes they must report the closure to revenue canada in the year that it closed. The company that closed probably reported to the gov. that you received income from them in 2004. If you received the income you have to pay the bill. If you didn't receive the money then you will need to open up a dispute. If you were the owner of the company and did not report any income, you can be assessed taxable income based on payments made to your company and then reported to the taxman. .............don't steal, the government hates competition........... Get your boss to approve/disapprove payment. S/he'll need to take the matter up with Gov. I hope you are not paying your employer's bills personally. |
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