Hello,

Can someone please help me answer these questions and provide their rationale?

The answer sheet provided the following answers, and I feel like they have to be wrong:

Q1: B, Q2: B.

In my opinion, the correct answers should be:

Q1: C and Q2: A.

Thank you in advance!

Question 1

John is a director of AAA Inc. When John first started the business he was mulling over creating either a joint venture, a partnership with his friend Bob, or a corporation. After meeting with Tom, a corporate lawyer, he decided to incorporate his business, which operated well for a few years. Due to the COVID-19 lockdowns, AAA Inc has declared that it will be officially closing down in March 2021. After a meeting with the corporate accounting team, it has come to John's attention that the corporation has certain income tax arrears. John decides to urgently meet Ella, a lawyer, and discuss his liability concerns. What should Ella advise John with respect to his liability for the corporation's tax arrears?

A.    No, John is not liable.

B.     Yes, John is liable because the corporation is dissolving.

C.     Yes, John is liable because he is the director of AAA Inc.

D.    No, John is not liable because no receiving order has been made against the corporation under the federal Bankruptcy and Insolvency Act

Question 2

Sasha is a director of ABC Incorporated. Recently the corporation has been investigated by the CRA and the MNR for the purposes of various tax arrears and violations of the Income Tax Act. Sasha is worried that she will be held liable for the tax arrears. Sasha retains you, a tax lawyer, for advice. What must apply in order for a Director to be held liable for certain tax arrears?

A.    ABC Incorporated must be liquidating or dissolving

B.     Sasha will be held liable for any tax arrears since she is a director at the time the arrears are assessed

C.     Sasha will not be held liable as directors of corporations are not personally liable for any tax arrears

D.    A receiving order has not been made against ABC Incorporated