INCOME TAX |
Reassessment |
Raphael v. Canada
A-691-00
2002 FCA 23, Sexton J.A.
17/1/02
6 pp.
Appeal from T.C.C. decision dismissing taxpayer's appeal from assessment under ITA, s. 160(1) in relation to transfer of money from husband's RRSP plan to taxpayer's account, allegedly to pay husband's creditors, when husband's company went bankrupt--Money also used to pay personal expenses--In fact, only half of husband's monies went to pay off existing debts of husband--In addition to other creditors, husband also owed income tax which was not paid-- Appellant then assessed under ITA, s. 160(1)--T.C.J. found four conditions in Doreen Williams v. The Queen, File No. 98-1604, July 4, 2000 (TCC), met: transfer of property; transferor and transferee not dealing at arm's length; inexistent or inadequate consideration flowing from transferee to transferor; transferor liable to pay amount under ITA in or in respect of year when property transferred or any preceding year--Appeal dismissed--Clearly intention of the parties not to set up arrangement whereby funds remained beneficially owned by husband--Thus no trust created--No sufficient consideration as taxpayer had made no legally enforceable promise to pay out monies only on husband's direction to his creditors in amounts equal to monies transferred--Only moral obligation--Question of whether can be consideration given between husband and wife so as to preclude application of ITA, s. 160(1) left unanswered--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 160(1).