Précis: This is an unusual case. The principal of the corporate taxpayer, Michael Soutar, received the help of his father, Ronald Soutar, in 2001 to guarantee a portion of the corporate bank debt. By 2007 the guarantee took the form of a $75,000 GIC deposit. Ronald died in February 2007 and the bank realized on the GIC deposit in June of 2007. Ronald’s estate had an income tax debt at that time in the amount of roughly $20,000 arising from his 2002 and 2005 taxation years. CRA assessed the corporate taxpayer for Ronald’s unpaid tax on the basis that the transfer in 2007 by the bank realization of the GIC deposit was a benefit for the purposes of subsection 160(1) of the Income Tax Act (the “Act”) (i.e., reducing the outstanding corporate bank debt).
M. Soutar Décor 2000 Ltd. v. R. - TCC: Subsection 160(1) transferee assessment upheldREAD MORE »