Corporate directors carry significant legal responsibilities, especially when it comes to tax compliance. Under Canadian law, directors can be held personally liable for a corporation’s failure to remit payroll source deductions and GST/HST (or QST in Quebec). This liability can extend up to two years after a director formally resigns—unless they exercised due diligence to prevent the failure.

A notable case from the Quebec Court of Appeal on November 29, 2024, underscores the risks of continuing to act in a directorial capacity after resignation. The taxpayer in question had officially resigned as a director in 2010. However, evidence showed he remained actively involved in the corporation’s banking, contract negotiations, and communications with Revenu Québec through 2012 and 2013. The Court concluded that these actions made him a de facto director, despite his formal resignation 

As a result, the taxpayer was held personally liable for the corporation’s unremitted QST and source deductions during that period. The ruling reinforces a critical point: resignation alone does not absolve liability. If a former director continues to perform directorial functions, they may still be held accountable for corporate debts.

If you resign as a director, ensure you cease all activities that could be interpreted as acting in a directorial role. This includes financial decision-making, contract oversight, and interactions with tax authorities. Failing to do so could expose you to significant personal liability—even years after stepping down.