Brief Section 160 Derivative Tax Assessment Overview
Rotfleisch & Samulovitch Professional Corporation was
retained by a married couple. The Husband was involved in a number
of different businesses and had accumulated an income tax debt of
close to $200,000. The Wife occasionally paid the expenses of one
of these businesses and the Husband would repay her by depositing
cheques into her bank account.
In the course of taking collections action against the Husband,
the Canada Revenue Agency (the "CRA") assessed the Wife
for significant portion of the Husband's income tax debt under
section 160a1of the Canadian Income Tax Act. When a
taxpayer makes a transfer of property, including cash, for below
fair market value to a non-arm's length person, including
spouses, then section 160 allows CRA to assess the non-length
person for an amount equal to the difference between the fair
market value of the property and what the non-arm's length
person paid the taxpayer for the
