Have you recently sold or renovated a home in Canada? You might be on the CRA’s radar for a “builder” audit — whether you think you’re a builder or not. The CRA has been aggressively targeting individuals who construct, substantially renovate, or flip residential properties and sell them, often without charging HST or properly reporting the income. In Ontario alone, real estate audits from 2015 to 2023 yielded over $300 million in GST/HST assessments, illustrating…

Statutory Framework for Directors’ Tax Liability Directors of Canadian corporations face personal liability if their company fails to remit certain taxes. Under Income Tax Act (Canada) (ITA) subsection 227.1(1) and Excise Tax Act (Canada) (ETA) subsection 323(1), directors are jointly and severally liable with the corporation for unremitted employee source withholdings (payroll deductions) and net GST/HST, including interest and penalties. Both statutes provide…

Introduction His Majesty the King v. Vefghi Holding Corporation and S.O.N.S. Environmental Ltd., 2025 FCA 143 (“Vefghi”), is a Federal Court of Appeal decision addressing the timing for determining whether two corporations are “connected” for the purposes of Part IV tax under paragraph 186(1)(a) of the Income Tax Act (Canada) (“Act”) when a trust intercedes in the payment of dividends. The case arose from a tax planning arrangement where family trusts receive…

When a corporation fails to remit its payroll withholdings or Goods and Services Tax/Harmonized Sales Tax (GST/HST) to the Canada Revenue Agency (CRA), the company’s directors can be held personally liable for those unpaid amounts in certain circumstances. Stepping down from a directorship does not automatically absolve someone of these tax obligations. In fact, Canadian tax law imposes a “two-year clock” on director liability: the CRA cannot commence an action aga…

Aggressive tax planning by wealthy individuals and complex business structures poses a significant challenge to the integrity of Canada’s tax system. In response, the Canada Revenue Agency (CRA) has bolstered its compliance arsenal, including the creation of specialized audit units. Foremost among these is the High Complexity Audit Tax Services Office (TSO) (also known as HCATSO) – a dedicated office within the CRA focused on the most complex and high-risk tax file…