https://decisia.lexum.com/tcc-cci/decisions/en/item/311897/index.do
Mottle v. The Queen (June 20, 2018 – 2018 TCC 116, Russell J.).
Précis: Ms. Mottle’s spouse caused his employment income to be transferred to Ms. Mottle’s account from which she used it to pay household expenses. There were 20 transfers from September 6, 2013 to July 18, 2014 totalling $10,849.92. At the date of each transfer the spouse’s outstanding tax debt exceeded the amount of the transfer, The debt totalled some $36,255.55. Ms. Mottle was assessed pursuant to subsection 160(1) of the Income Tax Act (the Act) in respect of the transfers. The Tax Court held that it was bound by the decision of the Federal Court of Appeal in Yates v. Her Majesty, 2009 FCA 50. The use of the transferred funds for family or living expenses did not preclude the operation of subsection 160(1) to tax the recipient of the funds. The appeal was dismissed without costs (it was an informal procedure appeal).
Decision: The Tax Court Judge found that he was obliged as a matter of precedent to deny Ms. Mottle’s appeal:
[6] The Appellant’s basic argument, made through her accountant representative, was that a substantial amount of this money that was transferred was earmarked for defraying household and family expenses. Evidence was introduced including bank account statements said to be reflecting household expenditures utilizing money received from the spouse’s employer by e-transfer. On this point, at the conclusion of the hearing I requested that both parties consider the decision of Yates v. Her Majesty, 2009 FCA 50, and provide written representations accordingly. This was done.
[7] In this appellate decision of Yates, the appellant’s spouse, a tax debtor, had deposited his paycheques into his wife’s bank account. The Federal Court of Appeal (FCA) had no difficulty confirming the Tax Court decision below that this constituted a transfer. But the FCA further made clear that section 160 allowed no ability to view as consideration for the transfer the use or intended use of any of the transferred money for household or family expenses regardless of any legal obligation for the making of such expenditures.
[8] The point was most clearly expressed in the concurring decision of Blais, J.A. at para. 67:
A plain language interpretation of subsection 160(1) does not allow for a family law exception, nor does it allow for an exception for household expenses. If Parliament had wanted to provide for such exemptions, it would have done so expressly. It is not for our Court to read these exemptions into the Act.
Accordingly the appeal was dismissed without costs.