Excise Tax Act (R.S.C., 1985, c. E-15)

Marginal note:Liability of directors

• 323 (1) If a corporation fails to remit an amount of net tax as required under subsection 228(2) or (2.3) or to pay an amount as required under section 230.1 that was paid to, or was applied to the liability of, the corporation as a net tax refund, the directors of the corporation at the time the corporation was required to remit or pay, as the case may be, the amount are jointly and severally, or solidarily, liable, together with the corporation, to pay the amount and any interest on, or penalties relating to, the amount.

• Marginal note:Limitations

  (2) A director of a corporation is not liable under subsection (1) unless

  • (a) a certificate for the amount of the corporation’s liability referred to in that subsection has been registered in the Federal Court under section 316 and execution for that amount has been returned unsatisfied in whole or in part;

  • (b) the corporation has commenced liquidation or dissolution proceedings or has been dissolved and a claim for the amount of the corporation’s liability referred to in subsection (1) has been proved within six months after the earlier of the date of commencement of the proceedings and the date of dissolution; or

  • (c) the corporation has made an assignment or a bankruptcy order has been made against it under the Bankruptcy and Insolvency Act and a claim for the amount of the corporation’s liability referred to in subsection (1) has been proved within six months after the date of the assignment or bankruptcy order.

• Marginal note:Diligence

  (3) A director of a corporation is not liable for a failure under subsection (1) where the director exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances.

• Marginal note:Assessment

  (4) The Minister may assess any person for any amount payable by the person under this section and, where the Minister sends a notice of assessment, sections 296 to 311 apply, with such modifications as the circumstances require.

• Marginal note:Time limit

  (5) An assessment under subsection (4) of any amount payable by a person who is a director of a corporation shall not be made more than two years after the person last ceased to be a director of the corporation.

• Marginal note:Amount recoverable

  (6) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

• Marginal note:Preference

  (7) Where a director of a corporation pays an amount in respect of a corporation’s liability referred to in subsection (1) that is proved in liquidation, dissolution or bankruptcy proceedings, the director is entitled to any preference that Her Majesty in right of Canada would have been entitled to had the amount not been so paid and, where a certificate that relates to the amount has been registered, the director is entitled to an assignment of the certificate to the extent of the director’s payment, which assignment the Minister is empowered to make.

• Marginal note:Contribution

  (8) A director who satisfies a claim under this section is entitled to contribution from the other directors who were liable for the claim.

Marginal note:Compliance by unincorporated bodies

• 324 (1) If any amount is required to be paid or remitted or any other thing is required to be done by or under this Part or the regulations made under this Part by a person (in this section referred to as the “body”) that is not an individual, corporation, partnership, trust or estate, it shall be the joint and several, or solidary, liability and responsibility of

  • (a) every member of the body holding office as president, chairperson, treasurer, secretary or similar officer of the body,

  • (b) where there are no such officers of the body, every member of any committee having management of the affairs of the body, and

  • (c) where there are no such officers of the body and no such committee, every member of the body,

  to pay or remit that amount or to comply with the requirement, and if the amount is paid or remitted or the requirement is fulfilled by an officer of the body, a member of such a committee or a member of the body, it shall be considered as compliance with the requirement.

• Marginal note:Assessment

  (2) The Minister may assess any person for any amount for which the person is liable under this section and, where the Minister sends a notice of assessment, sections 296 to 311 are applicable, with such modifications as the circumstances require.

• Marginal note:Limitation

  (3) An assessment of a person under subsection (2) shall not

  • (a) include any amount that the body was liable to pay or remit before the day the person became jointly and severally, or solidarily, liable;

  • (b) include any amount that the body became liable to pay or remit after the day the person ceased to be jointly and severally, or solidarily, liable; or

  • (c) be made more than two years after the day the person ceased to be jointly and severally, or solidarily, liable unless the person was grossly negligent in the carrying out of any duty or obligation imposed on the body by or under this Part or made, or participated in, assented to or acquiesced in the making of, a false statement or omission in a return, application, form, certificate, statement, invoice or answer made by the body.

Marginal note:Definitions

• 325 (0.1) The following definitions apply in this section.

  property

  property includes money. (bien)

  transaction

  transaction includes an arrangement or event. (opération)

• Marginal note:Tax liability re transfers not at arm’s length

  (1) Where at any time a person transfers property, either directly or indirectly, by means of a trust or by any other means, to

  • (a) the transferor’s spouse or common-law partner or an individual who has since become the transferor’s spouse or common-law partner,

  • (b) an individual who was under eighteen years of age, or

  • (c) another person with whom the transferor was not dealing at arm’s length,

  the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Part an amount equal to the lesser of

  • (d) the amount determined by the formula

    A - B

    where

    A

    is the amount, if any, by which the fair market value of the property at that time exceeds the fair market value at that time of the consideration given by the transferee for the transfer of the property, and

    B

    is the amount, if any, by which the amount assessed the transferee under subsection 160(2) of the Income Tax Act in respect of the property exceeds the amount paid by the transferor in respect of the amount so assessed, and

  • (e) the total of all amounts each of which is

    • (i) an amount that the transferor is liable to pay or remit under this Part for the reporting period of the transferor that includes that time or any preceding reporting period of the transferor, or

    • (ii) interest or penalty for which the transferor is liable as of that time,

  but nothing in this subsection limits the liability of the transferor under any provision of this Part.

• Marginal note:Fair market value of undivided interest

  (1.1) For the purpose of this section, the fair market value at any time of an undivided interest in a property, expressed as a proportionate interest in that property, is, subject to subsection (4), deemed to be equal to the same proportion of the fair market value of that property at that time.

• Marginal note:Assessment

  (2) The Minister may at any time assess a transferee in respect of any amount payable by reason of this section, and the provisions of sections 296 to 311 apply, with such modifications as the circumstances require.

• Marginal note:Discharge of liability

  (3) If a transferor and transferee have, by reason of subsection (1), become jointly and severally, or solidarily, liable in respect of part or all of the liability of the transferor under this Part, the following rules apply:

  • (a) a payment by the transferee on account of the transferee’s liability shall, to the extent of the payment, discharge their liability; and

  • (b) a payment by the transferor on account of the transferor’s liability only discharges the transferee’s liability to the extent that the payment operates to reduce the transferor’s liability to an amount less than the amount in respect of which the transferee was, by subsection (1), made jointly and severally, or solidarily, liable.

• Marginal note:Transfers to spouse or common-law partner

  (4) Despite subsection (1), if at any time an individual transfers property to the individual’s spouse or common-law partner under a decree, order or judgment of a competent tribunal or under a written separation agreement and, at that time, the individual and the individual’s spouse or common-law partner were separated and living apart as a result of the breakdown of their marriage or common-law partnership (as defined in subsection 248(1) of the Income Tax Act), for the purposes of paragraph (1)(d), the fair market value at that time of the property so transferred is deemed to be nil, but nothing in this subsection limits the liability of the individual under any provision of this Part.

• Marginal note:Anti-avoidance rules

  (5) For the purposes of this section, if a person transfers property to another person as part of a transaction or series of transactions, the following rules apply:

  • (a) the transferor is deemed to not be dealing at arm’s length with the transferee at the time of the transfer of the property if

    • (i) the transferor and the transferee do not deal at arm’s length at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, and

    • (ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and the transferor under this section for an amount payable or remittable under this Part;

  • (b) an amount that the transferor is liable to pay or remit under this Part (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (2) in respect of that amount) is deemed to have become payable or remittable, as the case may be, in the reporting period of the transferor in which the property was transferred, if it is reasonable to conclude that one of the purposes of the transfer of the property is to avoid the payment of a future amount payable under this Part by the transferor or transferee; and

  • (c) the amount determined for A in paragraph (1)(d) is deemed to be the greater of

    • (i) the amount otherwise determined for A in paragraph (1)(d) without reference to this paragraph, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the fair market value of the property at the time of the transfer, and

      B

      is the fair market value, at its lowest at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, of the consideration given by the transferee for the transfer of the property (other than any part of the consideration that is in a form that is cancelled or extinguished during that period and for which no property that is neither cancelled nor extinguished during that period is substituted) provided that the consideration is held by the transferor at that time.

SUBDIVISION FOffences

Marginal note:Offences

• 326 (1) Every person who fails to file or make a return as and when required by or under this Part or who fails to comply with subsection 286(2) or 291(2) or with an order made under subsection (2) is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to

  • (a) a fine of not less than $1,000 and not more than $25,000; or

  • (b) both a fine referred to in paragraph (a) and imprisonment for a term not exceeding twelve months.

• Marginal note:Compliance orders

  (2) Where a person has been convicted by a court of an offence under subsection (1) for a failure to comply with a provision of this Part or a regulation made under this Part, the court may make such order as it deems proper in order to enforce compliance with the provision.

• Marginal note:Saving

  (3) A person that is convicted under this section of failing to comply with a provision of this Part or a regulation made under this Part is not liable to pay a penalty imposed under any of sections 280.1, 280.11 and 283 to 284.1 or under a regulation made under this Part for the same failure, unless a notice of assessment for the penalty was issued before the information or complaint giving rise to the conviction was laid or made.

Marginal note:Offences

• 327 (1) Every person who has

  • (a) made, or participated in, assented to or acquiesced in the making of, false or deceptive statements in a return, application, certificate, statement, document or answer filed or made as required by or under this Part or the regulations made under this Part,

  • (b) for the purpose of evading payment or remittance of any tax or net tax payable under this Part, or obtaining a refund or rebate to which the person is not entitled under this Part,

    • (i) destroyed, altered, mutilated, secreted or otherwise disposed of any documents of a person, or

    • (ii) made, or assented to or acquiesced in the making of, false or deceptive entries, or omitted, or assented to or acquiesced in the omission, to enter a material particular in the documents of a person,

  • (c) wilfully, in any manner, evaded or attempted to evade compliance with this Part or payment or remittance of tax or net tax imposed under this Part,

  • (d) wilfully, in any manner, obtained or attempted to obtain a rebate or refund to which the person is not entitled under this Part, or

  • (e) conspired with any person to commit an offence described in any of paragraphs (a) to (c),

  is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to

  • (f) a fine of not less than 50%, and not more than 200%, of the amount of the tax or net tax that was sought to be evaded, or of the rebate or refund sought, or, where the amount that was sought to be evaded cannot be ascertained, a fine of not less than $1,000 and not more than $25,000, or

  • (g) both a fine referred to in paragraph (f) and imprisonment for a term not exceeding two years.

• Marginal note:Prosecution on indictment

  (2) Every person who is charged with an offence described in subsection (1) may, at the election of the Attorney General of Canada, be prosecuted on indictment and, if convicted, is, in addition to any penalty otherwise provided, liable to

  • (a) a fine of not less than 100%, and not more than 200%, of the amount of the tax or net tax that was sought to be evaded, or of the rebate or refund sought, or, where the amount that was sought to be evaded cannot be ascertained, a fine of not less than $2,000 and not more than $25,000, or

  • (b) both a fine referred to in paragraph (a) and imprisonment for a term not exceeding five years.

• Marginal note:Penalty on conviction

  (3) A person that is convicted of an offence under this section is not liable to pay a penalty imposed under any of sections 280.1, 280.11 and 283 to 285.1 or under a regulation made under this Part for the same evasion or attempt unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made.

• Marginal note:Stay of appeal

  (4) Where, in any appeal under this Part, substantially the same facts are at issue as those that are at issue in a prosecution under this section, the Minister may file a stay of proceedings with the Tax Court and thereupon the proceedings before the Tax Court are stayed pending final determination of the outcome of the prosecution.