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May 10, 2019 · The Toronto-Dominion Bank, 2018 FC 538 (the “TD Decision”) The TD Decision reiterates that a borrower’s unpaid taxes can take priority over the registered interests of secured lenders. In the TD Decision, the borrower owed taxes to CRA in the form of unremitted GST, tax debts due in 2007 and 2008. In 2010, the borrower obtained a loan ...
Sep 23, 2020 · The case in question, Toronto-Dominion Bank v. Canada, 1 reaffirms the Federal Crown’s “super priority” over other secured parties, including lenders, to recover unremitted Goods and Services Tax (“GST”), even if the GST debt arose after the security was registered. At issue was whether the Canada Revenue Agency (“CRA”) had ...
- What Is A Super Priority Lien?
- Deemed Trusts
- Protecting Lenders from The Invisible
A CRA super priority lien is a claim on a debtor’s assets. It takes priority over any other interests in those assets, such as a mortgage. In practice, super priority liens apply to money that businesses owe the CRA for two specific things: GST/HST and payroll taxes (also called source deductions). That’s because businesses collect that money from ...
A trust is money, property or some other asset that someone (the trustee) holds onto for someone else (the beneficiary) until a later date. Often, trusts are created by contracts or at least an agreement by everyone involved. Deemed trusts are different. Nobody creates them—they come into existence on their own because they’re implied by statutes o...
Tax liens makes risk assessment difficult for lenders because they’re so hard to predict. Deemed trusts don’t usually have paper trails, and spotting unremitted GST/HST and source deductions is almost impossible if the CRA hasn’t already taken action against the debtor. How can lenders operate with this level of uncertainty and risk? By protecting ...
Apr 11, 2020 · CRA Super Priority Liens— Exemption for Specified Security Interests. When a given taxpayer does not remit payroll source deductions or GST/HST as required by the ITA and ETA, the deemed tax trust applies to the property of the delinquent taxpayer, property held by secured creditors of the taxpayer and sale proceeds from each of the foregoing.
Sep 8, 2015 · The certificate can then be registered in the Federal Court. The registered certificate is referred to as a “memorial.” The memorial may then be registered in a province’s land title system or personal property security registry to create a lien in favour of CRA on the tax debtor’s real property or personal property, respectively.
May 21, 2020 · The CRA may enforce its super priority interest without prior notice to the secured creditor. There are limited exceptions to this super priority, including certain types of insolvency proceedings and prescribed security interest (e.g., conventional mortgages) registered prior to the section 222 deemed trust. Background
People also ask
Can unpaid taxes take priority over registered interests of secured lenders?
Can the CRA enforce a super priority interest?
What is a CRA Super priority lien?
What happens if a deemed trust has a super priority lien?
Does a deemed trust have a super priority over secured creditors?
Why do secured creditors have a super priority for GST/HST?
May 20, 2020 · Indeed, and as acknowledged by the FCA, an assignment of a tax debtor’s property for the benefit of its creditors under the BIA or the CCAA has the effect of extinguishing the deemed trust, with the result that the Crown’s debt then becomes an ordinary unsecured claim. 1 In such a situation, a secured creditor would not be liable for the GST debt of the tax debtor on the proceeds of a ...
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