The appellant, the sole director of a roofing company, appealed an assessment for unremitted GST/HST, penalties, and interest.
The company faced severe cash-flow problems because contractors refused to pay for completed subcontracts unless the appellant submitted to sexual harassment, and the company also faced racial discrimination.
The appellant and her office manager prioritized remittances, hired bookkeepers, communicated constantly with the CRA, and sought loans, but were unable to collect on key contracts.
The Tax Court of Canada allowed the appeal, finding that the appellant established a due diligence defence under subsection 323(3) of the Excise Tax Act because she exercised the required degree of care, diligence, and skill to prevent the failure to remit in these exceptional circumstances.
