Having CTA debt set aside

[anxious]

My ex has a $3.5 million CRA debt that I didn't know anything about. I need to find reasons and/or case law as to how I can get it set aside from any equalization payment. Otherwise I'll owe millions myself. Although not proven in court yet, I don't believe any of this money ever came into the house for the benefit of the family (under which I would have to pay my share). Any help would be appreciated.

 

[Moolight]

You will have to find out when the debt started and the source of it. Does he have a business?

I do not think you can exempt the debt from equalization but you can establish the part that existed prior the mariage.

Face it, he will also need asset to cover this debt.

 

[mom2three]

Anxious:

I went back and glanced at your other posts to refresh my memory respecting your circumstances.

Hadenough gave you the best advice on an earlier post, but I will reiterate it here: go and get yourself a good lawyer. You need to find a law firm that no only deals in family law but also has someone onboard that practices exclusively in corporate law/taxation law.

I don't think many here can provide you with the advice you need. Heck, many (if not most of us) are dealing with spouses that cannot agree who is to pay for the pizza lunches or the new pair of shoes. See where I am going here?

As for you not knowing about the debt? Correct me if I am wrong, but I do believe you own 49% of this corporation; ignorance of the debt is not a defence that you can not fall back on. You need an experienced corporate lawyer pronto.

And remember, the corporation and your personal finances are separate entities (the corporation owns the debt, not the shareholders). If the corporation has accumulated that much debt and goes belly up, rarely can personal assets be liquidated to pay that debt; however, 'lifting of the corporate veil' has been known to happen. So, let me say it again: you need to get a lawyer.

 

[billm]

I think you need to provide more details if you want reasons why you are not equally responsible for all debts acquired during the marriage.

What is the reason for the debt? How much of it is penalty? For how many years is this CRA debt attributed to?

What is your combined (yours and his) net worth from the marriage not including the CRA debt?

What do you want your net worth to be after equalization?

Not knowing about it does not mean you are not equally responsible for it. Any more than if you didn't know about assets he acquired during the marriage - I am sure you would want half of that.

 

[arabian]

If you were a director in the company you CAN be held responsible for the debt. This is one of the primary issues I have had to deal with. My ex went personally bankrupt which made him ineligible to be a director in an incorporated business. In other words I was left holding the bag. I have been divorced for 3 yrs now and am still cleaning up the mess as my ex has refused to turn over important documents.

There are many issues to look at and believe it or not CRA might be able to assist you. I worked/cooperated with them and they were quite helpful.

Always be mindful that CRA has the power to freeze your bank accounts. CRA does this frequently when someone ignores them. That in itself should be motivation for you to get your matters resolved.

 

[anxious]

Thanks Folks.

Thanks Folks.

He was assessed in each of 2005, 2006 and 2007 with $1 million each year. We have a company, but he was assessed personally. This is all during the marriage.
When a good offer came in on the house, he wouldn't accept it and wouldn't give me a reason. When I went to check title to see if something was wrong. I found the CRA liens. He's objected to the assessment which stops the collection process, but the interest keeps climbing. The house was lost on foreclosure - CRA took his half but left me mine, which he asked the court to freeze as his CRA debt makes my share of the proceeds his on equalization due to his debt!!! They treated it as his personal debt - not mine.
I can't change lawyers now, but I'm going to see about getting a corportate lawyer on board. I'm asking the court for funds on my next appearance in May to help with this, along with a business valuation.
CRA has also liened his brokerage accounts. I guess he was heavily trading in stocks and bonds.
I liked "Arabian's" comment about CRA being able to help. How do I approach this.
Thanks everyone - it's nice to know there's support out there.

 

[arabian]

Depending upon your current financial situation you may want to simply get together with CRA. It certainly is much cheaper (no cost) than hiring a corporate lawyer. I went to a corporate lawyer and was told that as I had filed for a divorce the assets/liabilities of the company became a family court matter. My divorce lawyer was very, very surprised by this. My ex and his g/f took all the remaining money from the company and deposited into the g/f's account. I had absolutely no recourse. Had I not been married to him I would have been able to do something. Go figure. I thought all those years I would have some protection as our company was incorporated. Not. Had I not been married to him it would have been handled differently. Absolutely crazy eh? I went to corporate lawyers and everyone wanted huge retainers (3 x larger than average divorce lawyers) which I simply did not have as all the money had been taken by ex and g/f.

You are fortunate to have at least retained your 1/2 of the home. I wasn't so lucky. I would simply get together with CRA. I worked with them over the past 3 yrs and it has turned out ok. Ask to speak to a 'team leader' and explain your situation. It doesn't sound like you are being held accountable under director's liability. Did your ex ever declare personal bankruptcy? You have to be able to define what was personal vs. business. How did he file his taxes every year? Proprietorship or incorporated?

You probably should be talking to the accountant at this point. Are all the company books up-to-date? Is the business still operating? What was your involvement, if any? Were you at arms-length to finances?