Joint and several liability for income tax liens comes from applying for a Social Insurance Number. This means not applying for one is never having joint and several liability. Or perhaps rescind that number?
Canada’s Income Tax Act (“ITA”) makes individuals have joint and several liability for income tax liens and debts. But why is that? How is that even possible? Doesn’t that violate my human rights? After all, it doesn’t sound fair!
Duhaime’s online legal dictionary defines “joint and several liability” as:
“Liability of more than one person for which each person is liable to pay back the entire amount of a debt or damages.”
For example, joint and several liability arises from co-signing a bank loan.
Tage Kendall is suing Royal Bank for repossessing his car. He’s never had a bank account there, or borrowed money from them. He owns his car free and clear.
According to this CBC news story, the repo firm says “the basis for the seizure was a default on a debt by a person who named him as a co-signer on the Subaru.” One small problem: “Kendall says he was not a co-signer.”
The CBC news story shows co-signing a bank loan is one way to have joint and several liability. Another is parents co-signing student loans. They often need to co-sign because students usually have few assets. Also, some may be underage and so cannot be held legally liable. (However, in the U.S., Hilary Clinton was instrumental in passing a law making it no longer possible to discharge student loans through bankruptcy.)
Canadian income tax liens also have joint and several liability.
Two things create joint and several liability for income tax liens. The first is applying for a Social Insurance Number.
Participation is voluntary… The information may also be shared … for the administration and enforcement of the legislation….
But it does NOT tell you the second thing: how, for income tax liens, “the administration and enforcement of the legislation…” makes you jointly and severally liable. To do that, we use Apu’s Theory, our income tax research.
The law says,
public money means all money belonging to Canada received or collected by the Receiver General …
Consolidated Revenue Fund means the aggregate of all public moneys that are on deposit at the credit of the Receiver General …
“By providing my banking information I authorize the Receiver General to deposit in the bank account number shown below any amounts payable to me by the CRA …”
In addition, up to 2013, the T1, page 4, says:
“Attach to page 1 a cheque or money order payable to the Receiver General …”
This makes everyone who has applied for a SIN card (and received benefits listed on a T1) jointly and severally liable for income tax liens. This is because that public money pool, the Consolidated Revenue Fund, affects all such people. Therefore, it becomes a trust and/or agency relationship with fiduciary duties and liabilities, and not a contractual relationship.
That is how the law makes a bank teller have joint and several liability for an account holder’s income tax liens. It’s how a CRA garnishee order, aka Requirement to Pay works.
That is also how the ITA makes individuals not at arm’s length, such as federal spouses, also have joint and several liability.
In short, it is the type of income (being Canada’s public money) that makes such people have joint and several liability. (Is that why the ITA does not define income?) Legally, it’s similar to co-signing a bank loan.
Canada hides how it makes you have joint and several liability for income tax liens. The answer seems to be the ITA deems us as handling Canada’s public money instead of our private property. In conclusion, being able to make taxpayers have joint and several liablity for income tax liens corroborates Apu’s Theory.
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