CRA Requirement to Pay: When Can a Third Party Become Personally Liable for Another Taxpayer’s Tax Debt? A Canadian Tax Lawyer’s Analysis of Dejifasanya v. The King

Contents:

• CRA Requirement to Pay: When Can a Third Party Become Personally Liable for Another Taxpayer’s Tax Debt? A Canadian Tax Lawyer’s Analysis of Dejifasanya v. The King

• Overview: When a CRA Requirement to Pay Can Turn Someone Else’s Tax Debt Into Your Own Liability
• How Does a CRA Requirement to Pay Work? The Statutory Framework
• Can a Third Party Avoid Personal Liability After Paying the Tax Debtor? The Four Arguments in Dejifasanya
• Did Paying the CRA Tax Lien Satisfy the Requirement to Pay?
• Were the Trust Funds Protected Because There Was No Debtor-Creditor Relationship?
• Was Due Diligence a Defence?
• Could the Lawyer Reduce the Amount of the CRA Assessment?
• Why the Tax Court Upheld the CRA Assessment
• What Does Dejifasanya Mean for Other Third Parties Who Receive a CRA Requirement to Pay?
• Practical Takeaways: What Should a Third Party Do After Receiving a CRA Requirement to Pay?
• Pro Tax Tips: Do Not Release Funds Until You Understand the CRA Requirement to Pay
• Frequently Asked Questions (FAQs) – About CRA Requirements to Pay
• What is a CRA Requirement to Pay?
• Can the CRA make me pay someone else’s tax debt?
• Do I have to be a debtor of the taxpayer for an RTP to apply?
• Can a CRA Requirement to Pay apply to money held in trust?
• Can a CRA Requirement to Pay apply to a lawyer’s trust account?
• Is a CRA tax lien the same thing as a Requirement to Pay?
• What happens if I pay the taxpayer after receiving a valid RTP?
• Is good faith or due diligence a defence if I misunderstood the RTP?
• Does an RTP make me liable for the taxpayer’s entire CRA debt?
• If I comply with the RTP, can the taxpayer demand that I pay the same money again?
• What should I do immediately after receiving a CRA Requirement to Pay?

Overview: When a CRA Requirement to Pay Can Turn Someone Else’s Tax Debt Into Your Own Liability

A Canada Revenue Agency (CRA) Requirement to Pay, or RTP, can require a third party legally obligated to pay a taxpayer with an outstanding tax debt to redirect that payment to the CRA instead. If the statutory requirements are satisfied and the third party pays the tax debtor rather than the CRA, the third party can become personally liable for the amount that should have been remitted.

That risk was central in Folasade Dejifasanya (also known as Foladeji Law Office) v. The King, 2026 TCC 151. The appellant was a Toronto real estate lawyer who held the proceeds from the sale of property in trust. One of her clients owed income tax to the CRA, and the CRA served the lawyer with a Requirement to Pay for $144,675.79. After the sale closed, the lawyer paid approximately $12,634 to discharge a separate GST lien but then paid $537,152.32 in remaining sale proceeds to the tax debtor without remitting the amount required by the RTP. The CRA subsequently assessed the lawyer personally for $144,675.79.

The Tax Court of Canada dismissed the lawyer’s appeal. It held that subsection 224(1) of the Income Tax Act was broad enough to apply because the lawyer had a legal obligation to pay the sale proceeds to the tax debtor. A conventional debtor-creditor relationship was not required. The Court also rejected the lawyer’s due-diligence argument and held that subsection 224(4) creates tax collection liability for failure to comply with an RTP rather than an administrative penalty to which a due-diligence defence applies.

“A CRA Requirement to Pay should never be treated as routine correspondence. Once a third party is legally required to pay money to a tax debtor and the CRA has validly redirected that payment, releasing the funds to the taxpayer or at the taxpayer’s direction instead can create a separate personal tax liability for the third party,” says David J. Rotfleisch, founding tax lawyer and CPA at Rotfleisch & Samulovitch, and a Law Society of Ontario Certified Specialist in Taxation.

The case is particularly important for lawyers holding trust funds, but its implications extend beyond legal trust accounts. Employers, financial institutions, trustees, corporations, businesses and other persons may receive Requirements to Pay where they owe or are legally required to pay money to a taxpayer with an outstanding CRA debt. Existing jurisprudence confirms that the key question is not simply who physically possesses the money, but whether the recipient of the RTP has a legally enforceable obligation to make a payment to the tax debtor.

Dejifasanya therefore illustrates both the breadth and the limits of the CRA’s Requirement to Pay regime. Receipt of an RTP does not automatically make a third party responsible for another person’s entire tax debt. However, where the statutory conditions are satisfied, misunderstanding the document, confusing it with another CRA collection measure, or paying the taxpayer first can expose the third party to a direct CRA tax assessment. If you receive a CRA Requirement to Pay, it is prudent to consult a top Canadian tax lawyer before releasing any affected funds, particularly where the ownership of the money, the scope of the RTP, or the recipient’s legal obligation to pay the tax debtor is unclear.

How Does a CRA Requirement to Pay Work? The Statutory Framework

A CRA Requirement to Pay is a statutory collection mechanism under section 224 of the Income Tax Act. In general terms, it allows the CRA to redirect money that a third party would otherwise be legally required to pay to a taxpayer who owes amounts under the Income Tax Act.

Under subsection 224(1), where the CRA knows or suspects that a person is, or will become within one year, liable to make a payment to a tax debtor, the CRA may require that person in writing to pay the money to the Receiver General instead. If the money is already payable, payment may be required immediately; if it becomes payable later, the RTP can operate when that payment obligation arises.

The current one-year look-forward period under subsection 224(1) is important because some older Requirement-to-Pay cases, including National Trust Co. v. Canada, 1998 CanLII 8214 (FCA), 1998 CarswellNat 1081, [1998] 4 C.T.C. 26, 98 D.T.C. 6409 (F.C.A.), considered an earlier version of subsection 224(1) that used a shorter statutory period. In National Trust, the tax debtor instructed the trustee of his self-directed RRSP to collapse the plan and pay him the proceeds. The Federal Court of Appeal held that the trustee was “liable to make a payment” because the taxpayer had an enforceable contractual right to receive the proceeds and the trustee had a corresponding legal obligation to pay them. The Court also confirmed that subsection 224(1) is not limited to conventional debtor-creditor relationships.

Subsection 224(2) also protects a third party that complies with an RTP. A payment made as required to the CRA provides a discharge of the third party’s original liability to the tax debtor to the extent of that payment. In other words, the third party is not expected to pay the same amount once to the CRA and again to the taxpayer.

The principal risk for a third party that receives an RTP arises under subsection 224(4). A person who fails to comply with an applicable Requirement to Pay can become personally liable for an amount equal to what that person was required to remit to the CRA. Paragraph 227(10)(a) then authorizes the CRA to issue a tax assessment for that liability. The provision does not automatically make the third party responsible for the tax debtor’s entire outstanding tax debt; the liability is tied to the amount the third party was required to pay under the applicable requirement.

The central question is therefore not simply whether the third party possesses money connected with the tax debtor. It is whether the third party is legally liable to make a payment to that person and whether the money falls within the terms and timing of the RTP. That distinction became central in Dejifasanya v. The King.

How a Third Party Can Become Personally Liable After Receiving a CRA Requirement to Pay

The facts of Dejifasanya illustrate the type of situation in which a third party can unexpectedly become exposed to personal CRA liability. A third party may be holding money for a taxpayer, owe money to that taxpayer, or otherwise be legally required to make a payment to the taxpayer when the CRA intervenes with a Requirement to Pay. What the third party does with the money after receiving the RTP can then become critical.

Ms. Folasade Dejifasanya was a Toronto real-estate lawyer acting for two vendors in the sale of a property in Vaughan, Ontario. One of the vendors, Cassandra Blissett-Davis, had an outstanding income tax debt to the CRA. As the lawyer handling the closing, Ms. Dejifasanya came into possession of sale proceeds that would ultimately become payable to her clients.

Before the transaction closed, the purchaser’s lawyer advised Ms. Dejifasanya that a CRA tax lien was registered against the property. The lien related to approximately $12,633 in GST owing under the Excise Tax Act. Ms. Dejifasanya contacted the CRA to arrange for the lien to be discharged from title once the required amount was paid from the closing proceeds.

The critical complication was that the CRA then sent the law office a package dealing with two separate collection matters. One concerned the GST lien. The other was a Requirement to Pay directing the law office to redirect money otherwise payable to Ms. Blissett-Davis to the Receiver General in respect of her separate income tax debt. The RTP also expressly warned that failure to comply could result in personal liability.

The distinction between those two CRA collection measures ultimately became important. At closing, the lawyer paid the amount necessary to discharge the GST lien and paid the outstanding mortgage. The vendors had also signed a written direction requiring the remaining net proceeds to be paid solely to Ms. Blissett-Davis. Ms. Dejifasanya then released those proceeds to the client without making the separate payment required by the RTP.

Ms. Dejifasanya apparently believed that the Requirement to Pay was connected with the tax lien and that satisfying the lien had addressed the CRA’s collection demand. The CRA took a different position. Because the law office had received a separate RTP and nevertheless paid money that was legally payable to the tax debtor, the CRA assessed Ms. Dejifasanya personally under subsection 224(4) and paragraph 227(10)(a) of the Income Tax Act.

“A third party who receives a CRA Requirement to Pay should not focus only on who owns the money. The critical question is whether the third party has a legal obligation to pay those funds to the tax debtor and, if so, whether the RTP requires that payment to be redirected to the CRA before the funds are released,” says David J. Rotfleisch.

The facts therefore demonstrate a broader risk for third parties. A person receiving an RTP should not assume that it merely repeats another CRA collection notice, that money held in trust is automatically outside its scope, or that following the taxpayer’s payment instructions necessarily protects the third party. The legal entitlement to the funds, the wording of the RTP, the timing of the payment obligation, and the existence of other CRA collection measures may all need to be considered before the money is released.

Ms. Dejifasanya challenged the CRA assessment on four principal grounds. Those arguments, and the Tax Court of Canada’s reasons for rejecting them, are discussed next.

Can a Third Party Avoid Personal Liability After Paying the Tax Debtor? The Four Arguments in Dejifasanya

Ms. Dejifasanya challenged the CRA tax assessment on four principal grounds. She argued that she had effectively complied with the Requirement to Pay by making the payment associated with the CRA lien, that the trust funds were outside the scope of subsection 224(1), that she had exercised due diligence, and, alternatively, that her liability should be reduced. The Tax Court rejected each argument and dismissed the appeal.

Did Paying the CRA Tax Lien Satisfy the Requirement to Pay?

Ms. Dejifasanya first argued that she had complied with the RTP to the extent of the amount actually requested because she had paid approximately $12,634 to the CRA from the closing proceeds. The Tax Court rejected that interpretation. The separate Requirement to Pay did not refer to the GST lien or the approximately $12,634 lien amount. Instead, the RTP identified $144,675.79 as the maximum payable and directed the law office to redirect money otherwise payable to the tax debtor. The Tax Court concluded that the amount associated with the lien was simply not the amount demanded under the RTP.

This aspect of the decision illustrates an important practical point for third parties receiving multiple CRA collection documents. A payment made in response to one collection measure should not be assumed to satisfy another. The wording, statutory basis, tax debt, and amount identified in each CRA document must be considered separately.

Were the Trust Funds Protected Because There Was No Debtor-Creditor Relationship?

The lawyer’s second argument went to the central legal question in the case. She maintained that the RTP could not apply because the sale proceeds were held in trust and she was not in a conventional debtor-creditor relationship with the tax debtor.

The real estate lawyer relied on DeConinck v. Royal Trust Corp., 1988 CarswellNB 129, [1989] 1 C.T.C. 179, 90 N.B.R. (2d) 321 (N.B.C.A.), which concerned the application of subsection 224(1) to funds held by an RRSP trustee. The Tax Court, however, concluded that the circumstances in Dejifasanya were materially different. The vendors had given the lawyer written instructions to pay the net sale proceeds to the tax debtor. The lawyer therefore had a legal obligation to make that payment once the sale closed.

The Tax Court relied on National Trust, in which the Federal Court of Appeal held that the phrase “liable to make a payment” is not confined to ordinary debtor-creditor relationships. The relevant question is whether the third party has a legal obligation to pay the tax debtor. Applying that principle, the Tax Court held that Ms. Dejifasanya was legally obligated to transfer the sale proceeds to her client and therefore fell within subsection 224(1).

The decision does not mean that every amount held in trust is automatically caught by an RTP. The existence and timing of the third party’s legal obligation remain critical. If funds are not legally payable to the tax debtor, or another person has the enforceable entitlement to them, the subsection 224(1) analysis may be different. What Dejifasanya confirms is that describing funds as “trust funds” does not, by itself, prevent an RTP from applying once the holder is legally required to pay those funds to the tax debtor. Given how fact-specific the analysis can be, consulting an experienced Canadian tax lawyer before releasing funds can help determine whether subsection 224(1) applies and whether complying with the RTP is legally required.

Was Due Diligence a Defence?

Ms. Dejifasanya also argued that she had exercised due diligence and that a due-diligence defence should be available.

The Tax Court rejected the argument both factually and legally. On the facts, the CRA cover communication expressly identified two separate matters: the lien and the Requirement to Pay. The Court observed that a review of the RTP would have shown that it was distinct from the lien documentation and did not refer to the lien amount. The CRA collections officer had also provided contact information, but there was no indication that clarification concerning the RTP was sought before the closing proceeds were released.

More significantly, the Court held that a due-diligence defence was not available under subsection 224(4). Justice Russell characterized subsection 224(4) as a tax collection provision creating tax collection liability, rather than an administrative penalty provision to which a due-diligence defence might apply. The Court therefore concluded that even apart from the factual shortcomings in the lawyer’s conduct, due diligence did not provide a defence to the subsection 224(4) assessment.

For recipients of an RTP, this distinction is significant. A good-faith misunderstanding of the CRA document may not, by itself, eliminate statutory liability after money that should have been redirected to the CRA has instead been paid to the tax debtor.

Could the Lawyer Reduce the Amount of the CRA Assessment?

As an alternative argument, Ms. Dejifasanya submitted that her liability should be reduced by the amount she had already paid to discharge the lien and by an additional amount she argued the CRA could otherwise have recovered.

The Court again disagreed. The approximately $12,634 lien payment related to GST owing under the Excise Tax Act. The RTP at issue concerned the tax debtor’s liability under the Income Tax Act. The Excise Tax Act was not one of the statutes identified by the particular RTP, and the Court therefore concluded that the GST payment could not be applied to reduce the separate income-tax amount covered by the Requirement to Pay. The Court also found that there was no sufficient basis to accept the proposed additional reduction.

Why the Tax Court Upheld the CRA Assessment

The Tax Court ultimately dismissed the appeal. The decisive fact was that Ms. Dejifasanya had received the RTP, was legally obligated to pay the relevant sale proceeds to the tax debtor, and nevertheless released those funds to the tax debtor rather than redirecting the required amount to the CRA. Her trust relationship with the client did not prevent subsection 224(1) from applying, the payment of a separate GST lien did not satisfy the income-tax RTP, and due diligence did not provide a defence under subsection 224(4).

The decision therefore reinforces that a third party challenging a subsection 224(4) tax assessment must look closely at the statutory elements of the RTP itself. Questions such as whether the funds were actually payable to the tax debtor, when the legal obligation arose, what amount the RTP covered, and whether the requirement validly applied to the particular payment may be more important than the third party’s subjective belief that the payment to the taxpayer was appropriate.

What Does Dejifasanya Mean for Other Third Parties Who Receive a CRA Requirement to Pay?

Dejifasanya did not create the CRA’s Requirement-to-Pay regime, but it provides a recent application of established principles to a particularly practical situation: a third party holding substantial funds for a taxpayer and being required to decide whether those funds should be released to the taxpayer or redirected to the CRA.

The central principle comes from National Trust. The Federal Court of Appeal held that “liable to make a payment” under subsection 224(1) is not limited to a conventional debtor-creditor relationship. What matters is whether the recipient of the RTP has a legal responsibility to make a payment to the tax debtor. Dejifasanya applies that principle directly to sale proceeds held by a lawyer after the vendors had instructed that those proceeds be paid to the tax debtor.

At the same time, the jurisprudence places limits on the CRA’s power. DeConinck demonstrates that the mere existence of property or money associated with a tax debtor does not necessarily mean that it is presently payable to that person. Where the relevant legal obligation to make payment has not yet arisen, subsection 224(1) may not attach in the same way. The distinction between DeConinck, National Trust and Dejifasanya therefore turns largely on whether and when the tax debtor acquired an enforceable right to receive the money.

Other cases confirm that the same analysis can arise outside traditional trust arrangements. In 3087-8847 Québec Inc. v. R., 2007 TCC 302, 2007 CarswellNat 1578, the Tax Court considered shareholder loans payable to a tax debtor and focused on whether the corporation had a legal responsibility to make payment during the period covered by the RTP. The Court held that a formal demand for repayment was not necessarily required in the circumstances of a demand shareholder loan.

Timing can also be decisive. In Encan Construction Ltd. v. R., 2007 TCC 579, 2007 CarswellNat 3128, a postdated cheque had been delivered before the RTP was received, but the Tax Court concluded that the underlying payment obligation had not been discharged because the cheque had not yet been negotiated. The case illustrates why a third party must determine not only whether money is owed, but also when the payment legally becomes payable.

The Supreme Court of Canada also considered the scope of subsection 224(1) in Canada Trustco Mortgage Co. v. Canada, 2011 SCC 36, [2011] 2 S.C.R. 635. The case arose from cheques drawn on a lawyer’s trust account and made payable to the tax debtor, which were deposited into a joint account held by the tax debtor and another person. The Tax Court had upheld the assessments against the bank in Canada Trustco Mortgage Co. v. R., 2008 TCC 482, and the Federal Court of Appeal affirmed that decision. However, the Supreme Court of Canada allowed the bank’s appeal, set aside the lower-court decisions, and vacated the assessments.

Importantly, the Supreme Court did not reject the broader principle from National Trust that subsection 224(1) is not confined to conventional debtor-creditor relationships. Rather, the Court focused on whether the recipient of the Requirement to Pay was legally liable to make a payment to the particular tax debtor. On the facts, the bank was not liable to pay the cheque proceeds to the tax debtor personally because the cheques had been presented for deposit into a joint account. Canada Trustco therefore reinforces both the breadth and the limits of subsection 224(1): the existence of funds connected to a tax debtor, including funds originating from a trust account, is not sufficient by itself. There must be a legal obligation on the recipient of the Requirement to Pay to make the relevant payment to the tax debtor.

Dejifasanya therefore fits within a broader principle: an RTP follows the legal obligation to make a payment, not merely the physical location or label attached to the money. Whether a particular RTP applies depends on the taxpayer’s enforceable entitlement, the recipient’s corresponding legal obligation, the timing of that obligation, and the wording and scope of the requirement.

For a third party faced with competing payment instructions, trust obligations or uncertainty about who is legally entitled to the funds, consulting an experienced Canadian tax lawyer before making the payment can help determine whether the CRA Requirement to Pay applies and whether releasing the funds could create personal tax liability.

Practical Takeaways: What Should a Third Party Do After Receiving a CRA Requirement to Pay?

Dejifasanya demonstrates that receiving a CRA Requirement to Pay should trigger an immediate review before money is released to the taxpayer. A third party does not become personally liable merely because an RTP has been received. The critical questions are whether the requirement applies to the particular payment, whether the third party is legally obligated to pay money to the tax debtor, and when that payment becomes legally payable.

The recipient should first identify exactly what the CRA document requires. This includes confirming the tax debtor named in the RTP, the maximum amount covered, the relevant payment obligation, the period during which the RTP operates, and the particular statutory liability identified. Dejifasanya illustrates why this matters: the GST lien and the Income Tax Act RTP were separate CRA collection measures, and satisfying one did not satisfy the other.

The third party should then determine who is legally entitled to the money. Physical possession of funds is not enough by itself. The relevant issue is whether the tax debtor has an enforceable entitlement to receive the payment and whether the third party has a corresponding legal obligation to make it. Funds belonging to another person, funds subject to a genuine competing entitlement, or amounts that have not yet become legally payable may require a different subsection 224(1) analysis.

Timing is equally important. An RTP may apply to money that is immediately payable as well as money that becomes payable during the applicable statutory period. A third party should therefore avoid assuming that a payment instruction, cheque, trust arrangement or future payment obligation falls outside the RTP merely because the money has not yet physically changed hands.

Where the RTP is unclear, the safest point to resolve that uncertainty is before the funds are released. The recipient should preserve the RTP and related CRA correspondence, document any communications with the CRA, review the contractual or trust arrangements governing the funds, and obtain clarification about any uncertainty concerning ownership, timing or payment obligations. In Dejifasanya, the Tax Court specifically noted that CRA contact information had been provided, but clarification about the separate RTP was not sought before the closing proceeds were paid to the client.

Finally, complying with an RTP does not generally mean that the third party must pay the same amount twice. Subsection 224(2) provides that payment made as required to the CRA discharges the third party’s original liability to the tax debtor to the extent of that payment. Conversely, subsection 224(4) does not automatically make the recipient liable for the taxpayer’s entire outstanding tax debt. The potential personal liability is tied to the amount that the recipient was required to remit under the applicable Requirement to Pay.

Pro Tax Tips: Do Not Release Funds Until You Understand the CRA Requirement to Pay

• A CRA Requirement to Pay should be treated as an immediate legal issue, not as routine collection correspondence. Before releasing money to the taxpayer, the recipient should determine exactly what the RTP covers, whether the taxpayer has an enforceable right to the funds, when the payment becomes legally payable, and whether any competing ownership, trust, contractual, or security interests affect the analysis.
• The recipient should also distinguish the RTP from other CRA collection measures. Dejifasanya demonstrates the risk of assuming that paying one CRA amount resolves another collection demand. The lawyer paid the amount required to discharge a GST lien, but the Tax Court held that this did not satisfy the separate Requirement to Pay concerning the client’s income tax debt.
• Where funds are held in trust, the word “trust” does not itself answer the section 224 question. The relevant issue is whether the tax debtor has become legally entitled to receive the money and whether the third party has a corresponding obligation to make that payment. The jurisprudence, including National Trust and DeConinck, shows that the timing and nature of that legal entitlement can determine whether an RTP attaches to the payment.
• A recipient should also avoid relying on good faith or an honest misunderstanding as the primary protection against liability. In Dejifasanya, the Tax Court held that a due-diligence defence was not available under subsection 224(4) and emphasized that the lawyer could have sought clarification before releasing the funds. The safer course is therefore to resolve uncertainty while the money is still under the third party’s control.

“The most important decision after receiving a Requirement to Pay is often the decision not to release the money until the recipient understands exactly who is legally entitled to it and what the CRA requires. Once the funds have been paid to the tax debtor, a misunderstanding that could have been resolved beforehand may have become a personal tax liability,” says David J. Rotfleisch.

Frequently Asked Questions (FAQs) – About CRA Requirements to Pay

What is a CRA Requirement to Pay?

A CRA Requirement to Pay, or RTP, is a statutory collection measure that can require a third party to redirect money that would otherwise be payable to a taxpayer with an outstanding tax debt. Instead of paying the taxpayer, the third party may be required to pay the specified amount to the Receiver General.

Can the CRA make me pay someone else’s tax debt?

Potentially, but receiving an RTP does not automatically make you responsible for the taxpayer’s entire debt. If you are legally required to make a payment to the tax debtor and the RTP applies to that payment, failing to redirect the required amount to the CRA can create personal liability under subsection 224(4) of the Income Tax Act.

Do I have to be a debtor of the taxpayer for an RTP to apply?

No. The Federal Court of Appeal in National Trust confirmed that “liable to make a payment” is not limited to a conventional debtor-creditor relationship. The key question is whether you have a legally enforceable obligation to make a payment to the tax debtor.

Can a CRA Requirement to Pay apply to money held in trust?

Yes, depending on the circumstances. Merely describing money as “trust funds” does not automatically place it outside subsection 224(1). The important question is whether the tax debtor has become legally entitled to receive the funds and whether the person holding them has a corresponding legal obligation to make that payment.

Can a CRA Requirement to Pay apply to a lawyer’s trust account?

It can. Dejifasanya v. The King involved a real-estate lawyer holding sale proceeds in trust who had received an RTP relating to her client. The Tax Court held that the lawyer was legally obligated to pay the relevant proceeds to the tax debtor and could therefore be subject to the Requirement to Pay.

Is a CRA tax lien the same thing as a Requirement to Pay?

No. A tax lien and a Requirement to Pay are different CRA collection measures and may relate to different liabilities. In Dejifasanya, payment of a GST lien under the Excise Tax Act did not satisfy a separate RTP concerning the client’s income-tax liability under the Income Tax Act.

What happens if I pay the taxpayer after receiving a valid RTP?

If the payment falls within the RTP and you pay the tax debtor instead of the CRA, subsection 224(4) may make you personally liable for the amount that should have been remitted. The CRA may then issue a tax assessment against you under paragraph 227(10)(a).

Is good faith or due diligence a defence if I misunderstood the RTP?

Not necessarily. In Dejifasanya, the Tax Court held that a due-diligence defence was not available under subsection 224(4), which it characterized as a tax collection provision creating tax collection liability rather than an administrative penalty provision. A good-faith misunderstanding may therefore not eliminate liability once money covered by the RTP has been released to the tax debtor.

Does an RTP make me liable for the taxpayer’s entire CRA debt?

No. Subsection 224(4) generally ties the third party’s personal liability to the amount that the third party was required to remit under the applicable RTP. The third party does not automatically assume all of the taxpayer’s outstanding tax liabilities.

If I comply with the RTP, can the taxpayer demand that I pay the same money again?

Generally, no. Subsection 224(2) provides that payment made as required to the CRA discharges the third party’s original liability to the tax debtor to the extent of the amount paid. This prevents the third party from ordinarily having to pay the same amount twice.

What should I do immediately after receiving a CRA Requirement to Pay?

Do not release potentially affected funds until you have reviewed the document carefully. Confirm the tax debtor, amount, applicable payment obligation, timing, ownership of the funds, and whether any trust, contractual, security, or competing third-party rights exist. If the scope of the RTP or your legal obligation is unclear, consulting an experienced Canadian tax lawyer before making the payment can help determine whether section 224 applies and reduce the risk of personal CRA liability.

DISCLAIMER: This article provides broad information. It is only accurate as of the posting date. It has not been updated and may be out-of-date. It does not give legal advice and should not be relied on as tax advice. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.