http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/109995/index.do 
Hardtke v. The Queen (June 3, 2015 – 2015 TCC 135, V. Miller J.).
Précis: The taxpayer’s spouse transferred the family home to her at a time when he owed a considerable amount in taxes. As consideration for the transfer she assumed a mortgage of $65,000 and gave her spouse $1 in cash. CRA assessed her on the difference between the value of the home at the date of transfer ($315,000) and the consideration given, i.e., $249,999. The taxpayer alleged that she had provided consideration, both before and after the transfer, to her spouse in the form of funds he used in his business. She also argued that she had had a claim to the property based on constructive or resulting trust. The Tax Court did not accept her evidence and also rejected the argument based on constructive or resulting trust. The appeal was dismissed with costs.
Decision: The Tax Court rejected the argument of constructive or resulting trust based on both jurisdictional and factual grounds:
[57] Counsel for the Appellant has requested that I declare that prior to the transfer, the Appellant held 50% of the Property by way of a constructive trust. It is my opinion that this court does not have the jurisdiction to grant the equitable remedy of constructive trust. Although the Tax Court is a superior court, it was created by statute and unlike the provincial superior courts it does not have inherent equitable jurisdiction. I agree with Webb J., as he then was, that the Tax Court is not a court of equity and cannot grant or declare the equitable remedy of a constructive trust: Darte (supra) at paragraph 21.
[58] Even if I had the jurisdiction to declare a constructive trust, this would require an analysis of the entire relationship between the Appellant and her spouse; the contributions each made to their assets and their liabilities; whether there were any agreements, marriage contracts, separation agreements or in general, any factors the parties would utilize in arguing for the division of their property rights: Kardaras v Canada, 2014 TCC 135. That analysis would have been impossible to make in the present case because the spouse was not a witness at the hearing and the evidence was lacking.
The argument that the taxpayer had funded her spouse’s business was rejected on the basis that the facts before the Court did not support it:
[60] In conclusion, the Appellant has not adduced sufficient evidence to show that she provided consideration in excess of $65,001 for the transfer of the Property. Documentary evidence was lacking and clear testimony was lacking. She said that she paid a portion of the down payment on the first matrimonial home and she contributed to the mortgages on each of the homes. However, she couldn’t even hazard a guess as to how much she contributed. The Appellant’s testimony was vague on key items. The Appellant has not discharged the onus which she had and the appeal is dismissed with costs to the Respondent.
TAGS: Income Tax Act, Subsection 160(1) ITA - Transferee Liability