Can I resign as a director to avoid personal liability for my Ontario corporation's debts?

Resigning as a director can limit future exposure, but it does not eliminate liability for obligations that arose while you were a director. For source deductions and HST, the two-year limitation period for CRA assessments runs from the date you cease to be a director — meaning the CRA has two years after your resignation to assess you personally for failures that occurred during your tenure. Resigning today does not erase past liability; it starts the clock on collection.

For wage liability under the Ontario Business Corporations Act, the limitation period for employee claims is also two years from the date the director ceases to hold office. Again, liability for wages that were already owed when you resigned does not disappear with the resignation.

Resignation can be a legitimate step — particularly if you have discovered financial mismanagement, cannot obtain information from co-directors, or believe the corporation is headed toward insolvency. Resigning before further debts are incurred limits future exposure. But resignation should be documented carefully (written notice, updating corporate registers, filing where required), and it should ideally be done after consulting a lawyer, since the timing, filing, and documentation of the resignation can all matter if liability is later contested.