Do Nonprofit Board Members Face CRA Director Liability?

Many people join a nonprofit board expecting to give their time, not to take on personal financial risk. But the CRA's director's liability rules don't carve out an exception for volunteers. If the nonprofit corporation fails to remit source deductions from staff pay or collected GST/HST, its directors — paid or unpaid — can be assessed personally for the shortfall.

This surprises a lot of well-meaning board members, especially at smaller nonprofits where finances are handled informally and directors assume "the treasurer" or "the bookkeeper" is on top of it.

The Same Rules Apply to Volunteer Directors

Director's liability is a statutory framework tied to holding the legal role of director — not to being paid, being involved in day-to-day operations, or having a finance background. A nonprofit corporation is still a corporation, and its board members are still directors in the eyes of this framework.

If the organization has any paid staff (triggering source deduction obligations) or is registered to collect GST/HST, the same exposure that applies to a for-profit corporation's directors applies to the nonprofit's board.

Why Nonprofit Boards Are Often Surprised

A few patterns show up repeatedly at smaller organizations:

• Informal financial oversight. A single volunteer treasurer or part-time bookkeeper manages remittances with little board-level review.
• Board turnover. Directors rotate frequently, and incoming members don't always get a clear picture of the organization's remittance history.
• Assuming nonprofit status changes the tax rules. Being a nonprofit affects how the organization's own income is taxed — it does not exempt the organization from remitting withheld source deductions or collected GST/HST, and it does not shield directors from the same personal liability framework that applies to any corporation.
• Limited financial literacy on the board. Boards recruited for subject-matter passion (arts, sports, advocacy) don't always have a director with financial expertise pushing for verification.

The Due Diligence Defence for Volunteer Directors

The same due diligence defence available to for-profit directors is available to nonprofit board members: if you exercised the care, diligence, and skill a reasonably prudent person would have exercised in comparable circumstances to try to prevent the failure, you may avoid personal liability. Passive trust in a treasurer, without any independent verification, generally will not meet that standard — regardless of how well-intentioned the reliance was.

Red Flags for Board Members to Watch For

• [ ] The treasurer's report doesn't specifically confirm that remittances (not just payroll itself) have actually gone out
• [ ] There's no board-level review of the organization's CRA remittance status at any point in the year
• [ ] The organization has fallen behind on remittances before and the board wasn't told promptly
• [ ] One person controls both payroll processing and remittance without any second signature or review
• [ ] The board has never asked to see confirmation of GST/HST filings if the organization is registered

Practical Governance Steps

1. Add remittance status to a standing board agenda item — even a brief confirmation, regularly, is better than silence.
2. Request documentary confirmation, not just verbal assurance, that source deductions and GST/HST have been remitted.
3. Separate duties where possible so one person isn't solely responsible for both processing and confirming remittances.
4. Document your questions and the answers you receive — this record matters if a due diligence defence is ever needed.
5. Escalate immediately in writing if you learn remittances are behind, and consider resigning if the problem continues despite your objections.

Frequently asked questions