Canada: FCA confirms CRA super priority over secured creditors on a GST/HST debtors’ property
In Toronto-Dominion Bank v Canada, the Federal Court of Appeal upheld the Federal Court’s decision that the Toronto-Dominion Bank was required to pay to the Canada Revenue Agency proceeds of $67,854 for unremitted GST that TD received as repayment from a borrower upon the discharge of a TD mortgage.
In Toronto-Dominion Bank v Canada, the Federal Court of Appeal upheld the Federal Court’s decision that the Toronto-Dominion Bank was required to pay to the Canada Revenue Agency proceeds of $67,854 for unremitted GST that TD received as repayment from a borrower upon the discharge of a TD mortgage.
The FCA’s decision confirms that amounts paid to a secured creditor from a debtor with an outstanding Goods and Services Tax/Harmonised Sales Tax (GST/HST) liability are deemed to be held in trust for the CRA. Outside of certain types of insolvency proceedings and prescribed security interests, the CRA’s deemed trust rights rank in priority to secured creditors.
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