Kyte v. Canada
T-1093-91
Rothstein J.
20/11/95
23 pp.
Appeal from Tax Court decision brought by way of special case pursuant to Federal Court Rules, R. 475-Issue whether plaintiff director may be assessed for Part VIII income tax which corporation failed to pay-Act, Part VIII assisting firms in obtaining external financing for research and development purposes by permitting corporation to renounce undeducted scientific research and development expenditures in favour of investors purchasing securities or loaning funds-Corporation issuing scientific research promissory note in amount of $1,000,000 and designating same pursuant to Act, Part VIII-Part VIII mechanism requiring tax payment of 50% of designated amount followed by refund entitlement on tax liability of up to 50% of Corporation's qualifying scientific research expenditures-Corporation failing to pay $500,000 tax liability as, by Corporation's estimate, refund entitlement exceeding $500,000-Minister registering certificate against Corporation for amount of $500,000, ie. $500,000 not off-set by refund entitlement-Minister assessing refund at lesser amount resulting in tax liability of $215,173.50-Tax refund created by Act at month-end such that Corporation's liability for income tax never reaching $500,000 as stated in certificate-Refund and balance of tax payable arising pursuant to Income Tax Act and not by Minister's determination of same; refund deemed payable on account of unpaid taxes when Income Tax Act so provides regardless of when Minister making determination-As $500,000 certificate not reflecting Corporation's liability under Part VIII of Act, issue whether director liable under s. 227.1 for income taxes owing and unpaid by corporation-Although registration of certificate constituting condition precedent to vicarious liability of directors, amount indicated on certificate not of same importance; basic object of s. 227.1 respected where certificate registered and execution attempted-Incorrect amount on certificate not derogating from adherence to object of legislation-Requirement certificate be for amount of corporation liability directory provision only-Error in certificate not requiring plaintiff's assessment be vacated or varied; plaintiff's liability not excused by reason of such error-Federal Court Rules, C.R.C., c. 663, R. 475-Income Tax Act, S.C. 1970-71-72, c. 63, s. 227.1 (as enacted by S.C. 1994, c. 7, Sch. V, s. 90).