Income Tax Act

Marginal note:Liability in respect of transfers by insolvent corporations

• 160.4 (1) Where property is transferred at any time by a corporation to a taxpayer with whom the corporation does not deal at arm’s length at that time and the corporation is not entitled because of subsection 61.3(3) to deduct an amount under section 61.3 in computing its income for a taxation year because of the transfer or because of the transfer and one or more other transactions, the taxpayer is jointly and severally liable with the corporation to pay an amount of the corporation’s tax under this Part for the year equal to 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 for the property, but nothing in this subsection limits the liability of the corporation under any other provision of this Act.

• Marginal note:Indirect transfers

  (2) Where

  • (a) property is transferred at any time from a taxpayer (in this subsection referred to as the “transferor”) to another taxpayer (in this subsection referred to as the “transferee”) with whom the transferor does not deal at arm’s length,

  • (b) the transferor is liable because of subsection 160.4(1) or this subsection to pay an amount of the tax of another person (in this subsection referred to as the “debtor”) under this Part, and

  • (c) it can reasonably be considered that one of the reasons of the transfer would, but for this subsection, be to prevent the enforcement of this section,

  the transferee is jointly and severally liable with the transferor and the debtor to pay an amount of the debtor’s tax under this Part equal to the lesser of the amount of such tax that the transferor was liable to pay at that time and 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 for the property, but nothing in this subsection limits the liability of the debtor or the transferor under any provision of this Act.

• Marginal note:Minister may assess recipient

  (3) The Minister may at any time assess a person in respect of any amount payable by the person because of this section and the provisions of this Division apply, with such modifications as the circumstances require, in respect of an assessment made under this section, as though it had been made under section 152.

• Marginal note:Rules applicable

  (4) Where a corporation and another person have, because of subsection 160.4(1) or 160.4(2), become jointly and severally liable in respect of part or all of a liability of the corporation under this Act

  • (a) a payment by the other person on account of that person’s liability shall to the extent thereof discharge the joint liability; and

  • (b) a payment by the corporation on account of the corporation’s liability discharges the other person’s liability only to the extent that the payment operates to reduce the corporation’s liability to an amount less than the amount in respect of which the other person was, by subsection 160.4(1) or 160.4(2), as the case may be, made liable.