Apparently, somebody thought it would be a good idea to appoint a spouse as a director of a corporation in whose business she was not involved in order to insulate her husband, the true directing mind of the business, from director’s liability for unremitted source deductions. The theory, it seems, was that the spouse-director could plead ignorance of any failure to remit (and thus take advantage of the due diligence defence), while the husband would be protected because he was not a legal director. In reality, in this post-Buckingham (2011 FCA 142) world, this strategy will likely expose both the husband and the wife. The wife will not escape liability by pleading ignorance, if she didn’t take steps to inform herself (and take action). The husband, meanwhile, would likely incur liability as a de facto director of the corporation. Summary of Constantin v R, 2013 FCA 233, in Bryan Horrigan and Rob Kreklewetz, “Perils of Appointing Uninvolved Spouse as Director” (July 2015) 15:1 Tax for the Owner-Manager 10.
