It seems that lately the CRA has been refusing to accept corporate authorization forms (RC59s) signed by anyone other than a director of a corporation. The CRA will refuse to accept the consent unless it is signed by somebody who appears in the “Ontario registry” as a director. What is the CRA up to now?
The RC59 is not a prescribed form; a taxpayer need not use it to authorize a representative. In fact, we prefer to use our own form of authorization rather than the RC59 because ours provides the broadest possible authority to us in our dealings with the CRA. In any event, the RC59 itself does not insist that a director must sign it before it is valid. The instructions on the back of the form merely state that “an authorized person” must sign, which the form says “includes a director of a corporation” [my emphasis]. Even so, the CRA refused to accept an RC59 from one of our clients recently although we were able to provide copies of a resolution specifically authorizing the person who signed the form to sign all tax-related documents.
The CRA position is especially puzzling in light of section 236 of the Income Tax Act (Canada), which provides as follows:
A return, certificate or other document made by a corporation pursuant to this Act or a regulation shall be signed on its behalf by the President, Secretary or Treasurer of the corporation or by any other officer or person thereunto duly authorized by the Board of Directors or other governing body of the corporation.
An RC59 is clearly a “document made by a corporation pursuant to this Act”. Moreover, the section makes it clear that any person (not just an officer or director) is entitled to sign a tax document on behalf of a corporation if the person is authorized to do so by the board of directors of the corporation. If an RC59 signed by an authorized person is good enough for the Act, why isn’t it good enough for the CRA?
It is also worth pointing out that a fixation with the Ontario “registry” (the Ontario corporate information system) is unhelpful, not least because the registry is often inaccurate. Moreover, while it is true that all of the directors of a corporation must be listed on the system, not all officers need be. Only senior officers (like the president, secretary and treasurer) must be listed. Why? The Ontario Business Corporations Act provides for considerable flexibility with respect to the appointment of officers. Section 133 of the latter statute reads as follows:
133. Subject to the articles, the by-laws or any unanimous shareholder agreement,
(a) the directors may designate the offices of the corporation, appoint officers, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except, subject to section 184, powers to do anything referred to in subsection 127 (3);
(b) a director may be appointed to any office of the corporation; and
(c) two or more offices of the corporation may be held by the same person.
A corporation can have many officers in addition to a president, secretary and treasurer, and all of them are legally “officers” for corporate law purposes even if they are not listed on the Ontario “registry”.
In light of the foregoing, it is tempting (for a lawyer anyway) to cite chapter and verse and then tell the CRA to take its policy and stuff it in a sack. As satisfying as that might be, however, it is unlikely to produce results, especially when one considers the matter from the CRA’s perspective. The CRA can’t hand out information about a taxpayer to just anyone who asks for it. Section 241 makes that a criminal offence in certain circumstances, and so the CRA must be quite careful about accepting authorizations from taxpayers. But what does “being quite careful” mean? How can the CRA tell whether the person signing an authorization has the authority to do so? The CRA could ask for a copy of the appropriate resolution and compare its signatories to the list of directors in the “registry”, but that seems like a lot of work for all concerned. It’s just easier to insist that the person signing the authorization in the first place be listed in the registry.
This is one of those cases where administrative convenience is likely to trump flexibility or even the provisions of the Income Tax Act and the Ontario Business Corporations Act.
