Why CRA Collections Officers Should Not Decide Their Own Cases
When the Canada Revenue Agency (CRA) threatens a director’s liability assessment, a section 160 or 325 assessment, or a related derivative assessment, the case is handled by the CRA’s Collections Division. What many taxpayers do not realize is that the same collections officer who raised the threat of an assessment makes the decision on whether to issue it.
This structure raises serious fairness concerns. In effect, the officer acts as both investigator and decision-maker, creating a built-in conflict of interest. Instead of having an impartial review, the taxpayer is left with the very person who initiated the process deciding whether it should stand.
Why It Matters for Director’s Liability
Under the Income and Excise Tax Acts, directors can be held personally responsible for a corporation’s unremitted source deductions or GST/HST. These assessments can amount to hundreds of thousands of dollars and threaten the personal finances of directors. The decision of whether to pursue a director’s liability claim is a major one and yet the first level of review is not independent.
Section 160 and Similar Assessments
Section 160 or 325 of the Income and Excise Tax Acts allows the CRA to assess someone who received a transfer of property from a tax debtor for less than fair market value. Like director’s liability, these assessments are handled by Collections. Again, the same officer who initiated the assessment determines if it should proceed, with little to no separation of roles.
Why the Process Is Unwise and Unfair
This system undermines the appearance and reality of fairness. Taxpayers have the right to an impartial decision-maker. Allowing the same collections officer to act as both prosecutor and judge creates the risk of bias, or at least the perception of bias. It also encourages rigid enforcement instead of thoughtful consideration of the facts.
Independent oversight would better balance the interests of taxpayers and the government. Until then, the burden falls on taxpayers to challenge these decisions through objections, appeals, or judicial review.
Protecting Your Rights
If you are facing a director’s liability, section 160/325, or similar derivative assessment, do not assume the initial CRA decision is final. Legal representation is often essential to ensure your case is presented fairly and to push back against flawed or biased processes.
Kirshen Tax Law Can Help
At Kirshen Tax Law, we represent directors, spouses, family members, and business partners caught in the CRA’s derivative assessment net. We understand the collections process and the risks of having the same officer act as investigator and decision-maker. Our goal is to level the playing field and protect your financial future.
Contact us today for a free consultation with a Toronto tax lawyer.
Jeff Kirshen BA, JD (CA), JD (US)
Tax Lawyer | Founder, Kirshen Tax Law
Disclaimer
The content on this website, including articles and blog posts, is provided for general informational purposes only. It reflects the laws and regulations as of the date of publication, which may have since changed. This content is not intended to serve as legal advice and should not be relied upon as such. Tax laws and situations can be complex and unique to each individual. The information provided may not apply to your specific circumstances. For personalized advice regarding your tax or legal matters, we recommend consulting a qualified lawyer.