Excise Act, 2001

Marginal note:Definitions

• 297 (0.1) The following definitions apply in this section.

  common-law partner

  common-law partner of an individual at any time means a person who is the common-law partner of the individual at that time for the purposes of the Income Tax Act. (conjoint de fait)

  common-law partnership

  common-law partnership means the relationship between two persons who are common-law partners of each other. (union de fait)

  transaction

  transaction includes an arrangement or event. (opération)

• Marginal note:Liability re transfers not at arm’s length

  (1) If at any time a person transfers property, either directly or indirectly, by a trust or any other means, to

  • (a) their spouse or common-law partner or an individual who has since become their spouse or common-law partner,

  • (b) an individual who was under 18 years of age, or

  • (c) another person with whom the transferor was not dealing at arm’s length,

  the transferee and transferor are jointly and severally or solidarily liable to pay an amount equal to the lesser of

  • (d) the amount determined by the formula

    A - B

    where

    A

    is the amount, if any, by which the fair market value of the property at that time exceeds the fair market value at that time of the consideration given by the transferee for the transfer of the property, and

    B

    is the amount, if any, by which the total of all amounts, if any, the transferee was assessed under subsection 325(2) of the Excise Tax Act or subsection 160(2) of the Income Tax Act in respect of the property exceeds the amount paid by the transferor in respect of the amounts so assessed, and

  • (e) the total of all amounts each of which is

    • (i) an amount that the transferor is liable to pay under this Act in respect of the reporting period in which the property was transferred or any preceding reporting period, or

    • (ii) interest for which the transferor is liable as of that time.

  However, nothing in this subsection limits the liability of the transferor under any other provision of this Act.

• Marginal note:Fair market value of undivided interest

  (2) For the purposes of this section, the fair market value at any time of an undivided interest in a property, expressed as a proportionate interest in the property, is, subject to subsection (5), deemed to be equal to the same proportion of the fair market value of the property at that time.

• Marginal note:Assessment

  (3) The Minister may at any time assess a transferee in respect of any amount payable by reason of this section, and, if the Minister sends a notice of assessment, sections 188 to 205 apply with any modifications that the circumstances require.

• Marginal note:Rules applicable

  (4) If a transferor and transferee have, by reason of subsection (1), become jointly and severally or solidarily liable in respect of all or part of the liability of the transferor under this Act, the following rules apply:

  • (a) a payment by the transferee on account of the transferee’s liability shall, to the extent of the payment, discharge the joint liability; and

  • (b) a payment by the transferor on account of the transferor’s liability only discharges the transferee’s liability to the extent that the payment operates to reduce the transferor’s liability to an amount less than the amount in respect of which the transferee was, under subsection (1), made jointly and severally or solidarily liable.

• Marginal note:Special transfers to spouse or common-law partner

  (5) Despite subsection (1), if at any time an individual transfers property to their spouse or common-law partner under a decree, order or judgment of a competent tribunal or under a written separation agreement and, at that time, the individual and their spouse or common-law partner were separated and living apart as a result of a breakdown of their marriage or common-law partnership, for the purposes of paragraph (1)(d), the fair market value at that time of the property so transferred is deemed to be nil. However, nothing in this subsection limits the liability of the individual under any other provision of this Act.

• Marginal note:Anti-avoidance rules

  (6) For the purposes of this section, if a person transfers property to another person as part of a transaction or series of transactions, the following rules apply:

  • (a) the transferor is deemed to not be dealing at arm’s length with the transferee at the time of the transfer of the property if

    • (i) the transferor and the transferee do not deal at arm’s length at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, and

    • (ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and the transferor under this section for an amount payable under this Act;

  • (b) an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (3) in respect of that amount) is deemed to have become payable in the reporting period of the transferor in which the property was transferred, if it is reasonable to conclude that one of the purposes of the transfer of the property is to avoid the payment of a future amount payable under this Act by the transferor or transferee; and

  • (c) the amount determined for A in paragraph (1)(d) is deemed to be the greater of

    • (i) the amount otherwise determined for A in paragraph (1)(d) without reference to this paragraph, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the fair market value of the property at the time of the transfer, and

      B

      is the fair market value, at its lowest at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, of the consideration given by the transferee for the transfer of the property (other than any part of the consideration that is in a form that is cancelled or extinguished during that period and for which no property that is neither cancelled nor extinguished during that period is substituted) provided that the consideration is held by the transferor at that time.