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ARTICLE · 12 OCTOBER 2026

Section 160: The Tax Debt Trap Hiding In Plain Sight

Robins Appleby LLP
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Section 160 of the Income Tax Act allows the CRA to hold transferees liable for a transferor's unpaid taxes when property changes hands between non-arm's length parties for less than fair market value. This provision catches not only intentional tax avoidance schemes but also ordinary family arrangements, corporate dividends, and estate planning steps that many advisers and taxpayers overlook until an assessment arrives years later.

CanadaTax
Eric Miller
Eric Miller
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As published on CBA National Magazine on Sep 24, 2026

Every day, assets change hands between people who trust one another. A parent adds a child to title. A spouse takes sole ownership of the family home. A corporation declares a dividend. An owner tidies up the books before a sale. Almost no one thinks of these events as tax planning; more often they are considered family arrangements, estate steps, or ordinary corporate housekeeping.

Then a letter arrives from the CRA, advising that the person who received the asset may be liable for the transferor’s unpaid taxes.

That is the force of section 160 of the Income Tax Act. It is not new or exotic, but highly underestimated. Put simply, its purpose is to preclude a tax debtor from putting property beyond CRA’s reach by passing it to someone close for less than fair market value.

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