First Appeard In Fall 2001 TaxLine:Tax Litigation Briefings.
Section 160 of the Income Tax Act (Canada) (the "Act") provides that where a person has transferred property to a spouse, minor or non-arm’s length person, the transferee will be jointly and severally liable for tax that the transferor was liable to pay at the time of transfer, subject to certain limits. There is no time limit in which the CCRA must assess a taxpayer under section 160 of the Act.
In Algoa Trust v. The Queen,98 D.T.C. 1614, the Tax Court of Canada held that interest could not be charged on an assessment issued under section 160. In Algoa,the corporate taxpayer paid a cash dividend to one shareholder and a stock dividend to the other. At the time the dividends were paid, the company had satisfied all of its tax liabilities. The corporation was subsequently reassessed for additional taxes for the taxation year in which the transfer was made.
