A director was assessed under ETA s. 323 and the Quebec equivalent for unpaid GST/QST of the inactive corporation. After finding that he was not able to deduct the legal fees incurred by him in negotiations with the tax authorities, the Directorate went on to state:
… E9930565, F9809347 and E9608715 … discussed the tax treatment of the debt paid by directors in discharge of their joint and several liability with a corporation … [and concluded] that the debt arising to the directors from their obligation had not been acquired with a view to earning income from a business or property. Consequently, given the application of subparagraph 40(2)(g)(ii), the directors could not claim a capital loss or a business investment loss.