De Jure versus De Facto Directors of Corporations

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De Jure versus De Facto Directors of Corporations

MacDonald v The Queen, 2014 TCC 308

The Appellant was assessed under the directors’ liability provisions of the Income Tax Act (Section 227.1) and Excise Tax Act (Section 323) to be liable for a corporation’s tax debts.

The Appellant argued that he never consented to be a director and never held himself out to be a director of the corporation, or in the alternative exercised due diligence, and therefore not liable for the corporation’s debts.


For the purpose of the directors’ liability provisions under the ITA and the ETA a “director” is either a de jure or a de facto director: Mosier v. R., [2001] G.S.T.C. 124.

De Jure Director

A de jure director is a person who has been appointed as a director under the appropriate corporate statute.  Therefore one must look to the governing corporate statute under which the corporation was created or continued.

The public registry of directors only creates a rebuttable presumption that a person so listed is de jure director.  This presumption may be overcome using evidence to the contrary, including evidence that the person never consented to be a director.

A person who was not aware they were a director and never consented to be a director is not a de jure director: Lau v. R., [2003] G.S.T.C. 1; Hay v. Canada, 2004 TCC 51.

In this case, the person did not know he was a director and did not consent to act as a director.  Also, the corporate process required to appoint a director was not followed, and no resolution was passed.

De Factor Director

A de facto director may be either (I) a person who is ostensibly duly elected but lacks some qualification under the relevant corporate statute, or (ii) a person who simply assumed the role of director without any pretense of legal qualification.

The FCA in Wheeliker v. R., [1999] 2 C.T.C. 395, held that de facto directors may be liable even without a valid appointment.  But, de facto director findings are limited to persons who hold themselves out as directors: Scavuzzo v. R., [2005] G.S.T.C. 199.

Generally, it is not appropriate to assess a person as a de facto director where “there are legally appointed directors in office at the relevant time” (para 40), and should only be based on a person holding himself out as  director based on written evidence of such behaviour (para 40). [NOTE: but see decisions in McDonald v The Queen, 2014 TCC 315; Hartrell v The Queen, 2006 TCC 480, aff’d 2008 FCA 59; where third party representation as director is not such an essential factor that its presence or absence would be conclusive]

Where a person “did not believe he is a director and never thought he had any authority to advise, influence, or control the management or director of the company”, that person should not be considered a de facto director: Perricelli v. R., 2002 G.T.C. 244. Also, steps including “steps taken to satisfy the requirements of the Excise Tax Act such as the preparation of invoices, meeting with the auditor, hiring a lawyer and signing cheques were not in themselves acts of a director”: Hay v. Canada, 2004 TCC 51.  The role the person plays cannot be limited or inconsistent with that of a director: Mikloski v. R., 2004 TCC 253.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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