Untangling Three Stakes in One Brantford Corporate Arrears Balance

The situation

By the time Anh came to us, a payment plan was already in place. It just was not working. Anh runs a small incorporated consulting business out of Brantford, advising greenhouse operators on equipment and production scheduling, and the corporation had fallen behind on HST and payroll source deduction remittances by a little under fifteen thousand dollars. Anh had called CRA collections directly, proposed a flat monthly amount based on a rough average of the year's income, and had it accepted. For two months the payments went through. Then they did not, because the average was fiction.

The consulting business does not earn evenly across the year. Most of its contract work clusters in the weeks before and during the spring planting push, when greenhouse operators need scheduling and equipment advice fast and pay promptly to get it. Late summer and winter bring almost nothing in. Anh's spouse, Minh, works seasonally at a greenhouse and carries the household through the same narrow window, meaning the family's entire income arrived in the same few months and dried up the rest of the year. A flat monthly arrears payment set at the annual average was affordable in May and impossible in November, and CRA does not adjust an agreed schedule simply because a payer explains, after the fact, that the math never worked.

There was a third complication. Mirela had been a minority shareholder and director of the corporation until roughly a year earlier, when she left to take a full-time position as a veterinary technician, unrelated to the consulting business and unrelated to greenhouses. She had signed off on director resolutions during her time with the company, including in the period when some of the arrears accrued. CRA's collections letters had gone to the corporation and to Anh personally as the active director, but Mirela had separately received a notice raising the possibility that she could still be pursued for a portion of the unremitted amounts from her time on the board, even though she had resigned and had no ongoing role or income from the business.

So there were three people with an interest in the outcome and three different pictures of a fair resolution. Anh wanted the corporation to survive the arrears without another missed-payment default. Minh wanted the household's already tight seasonal budget left alone. Mirela wanted to be released from a liability tied to a business she no longer had any stake in, without paying for arrears that had partly accrued after she left. None of that had been sorted out before the first payment plan was proposed, which was a large part of why it broke.

What the review found

We started by pulling the corporation's revenue and remittance history month by month for the prior two years, rather than relying on the annual figure CRA's collections officer had used to set the original plan. The pattern was consistent and stark: roughly seventy percent of the year's contract billings landed in a ten-week window in spring, with the remaining months producing barely enough to cover the corporation's own fixed costs, let alone an arrears payment. This was not a one-time cash crunch. It was the business's normal shape, and any flat monthly schedule was always going to fail in the off months regardless of how reasonable the average looked on paper.

We also separated out what portion of the arrears had accrued before and after Mirela's resignation as director. This mattered because director liability for a corporation's unremitted source deductions and HST does not simply disappear the day someone resigns. There is a window during which a former director can still be pursued for amounts that came due while they were on the board, but that liability is generally tied to the specific remittance periods during their tenure, not to the corporation's total arrears balance at any later date. Roughly a third of the outstanding amount traced to periods before Mirela left. The rest had accrued afterward, once Anh was the sole active director, and did not belong to her at all.

Reviewing Minh's position, we confirmed there was no legal basis for CRA to look to Minh personally for the corporation's remittance debt. Minh had no ownership interest, no director role, and no signing authority on the business. The earlier plan's practical dependence on Minh's seasonal paycheque was a household budgeting reality, not a legal obligation, but it explained why the family had structured the failed payments the way they had: they were trying to smooth the corporation's uneven income using whatever cash was on hand, which was often Minh's.

Putting the three pieces together, the review found a plan built on the wrong foundation from the start. It had used an average that did not match the business's real cash flow, it had implicitly drawn on a household income stream with no legal connection to the debt, and it had left a former director exposed to a share of the balance larger than her actual period of responsibility. Each of those needed a separate fix, not one blended number.

What we did

1. Recalculated the arrears by remittance period to establish exactly which portion accrued while Mirela was a director and which accrued after her resignation, using the corporation's filing history rather than the total balance CRA had been treating as a single figure. We cross-checked each period against payroll records and HST filings, giving us a defensible number instead of an estimate before asking CRA to treat Mirela's exposure differently from Anh's.
2. Prepared a seasonal cash flow schedule for the corporation showing actual monthly billings and expenses over the prior two years, so the proposed plan could be built around when the business genuinely had money rather than an annual average. We included the current year's signed contracts to show the pattern was continuing, and flagged the fixed costs that had to be paid before any arrears instalment could go out.
3. Contacted CRA collections to explain why the existing plan had defaulted, walking the officer through the cash flow schedule rather than simply asking for a lower monthly amount. What moved the conversation was showing the shape of the income, not just its size, and demonstrating the corporation had kept making token payments in the months it could not meet the full instalment.
4. Proposed a graduated schedule tied to the business's spring revenue window, with larger payments concentrated in the months when contracts were billed and paid, and minimal token payments in the slow months, structured so the total matched what a flat plan would have collected over the same period but did not require money the corporation would not have on hand. We built in a small buffer in case a contract slipped past its expected billing date.
5. Separated Mirela's file from the corporation's collections file and made the case directly to CRA that her exposure should be limited to the remittance periods during her directorship, supported by the period-by-period calculation from the first step, rather than a proportional share of the corporation's current total balance. This required a separate written submission, since the corporation's collections officer had no authority over an individual director's file.
6. Negotiated a one-time settlement for Mirela's portion covering only the pre-resignation arrears, which she paid in full to close her exposure entirely rather than remain tied to a corporate debt she had no ongoing ability to influence or benefit from. A lump-sum resolution suited her better than a payment plan of her own, since she had no relationship to the business left to manage around.
7. Documented the new arrangement in writing with CRA, including the seasonal payment schedule for the corporation and the confirmation that Mirela's liability was resolved and closed, so that no future collections contact would treat her as still on the hook for amounts that postdated her time as director. Written confirmation mattered because collections files can otherwise be reopened by a different officer unaware of the earlier resolution.
8. Reviewed Anh's ongoing remittance practices and recommended the corporation set aside a fixed percentage of each spring contract payment into a separate account earmarked for source deductions and HST going forward, since those amounts are held for the Crown rather than being the corporation's own cash. A simple monthly check against that account would keep the same seasonal mismatch from quietly producing another arrears balance once the current plan was paid off.

The outcome

CRA accepted the seasonal payment schedule for the corporation, with the bulk of the arrears cleared through two concentrated spring payments each year rather than twelve equal monthly instalments, plus small token payments in the off months to keep the account visibly active. The corporation has stayed current on the revised plan since it was put in place, and Anh has not had to choose between paying the arrears and paying the corporation's own bills during the slow months, which is what broke the original plan within its first two months.

Mirela's separate settlement closed out her liability entirely for a figure in the low thousands, matching only the remittance periods that fell during her time as director rather than a proportional share of the full balance. She paid it as a single lump sum rather than carrying an open-ended risk tied to a business she had no further connection to, and CRA confirmed in writing that no further collections action would be taken against her personally for any period after her resignation. That written confirmation was the part she cared about most; the dollar amount was secondary to knowing the file was actually closed.

Minh's position never needed a formal resolution because there was never a legal claim against Minh to begin with, but separating that out mattered practically. The household budget is no longer treated, even informally, as a backstop for the corporation's arrears, and Minh's seasonal earnings from the greenhouse role support the family the way they were always meant to. That distinction had never been made explicit before, and making it explicit removed a source of ongoing household stress unrelated to the arrears total itself.

The arrangement worked because it matched three obligations to three people instead of asking one payment plan to cover all of them. Anh's corporation, Mirela's past directorship, and Minh's household income were separate questions collapsed into one failing monthly payment, and pulling them apart let each piece get resolved on terms that fit the person carrying it.

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