Domenic Marciano

The appellant appealed an assessment under section 160 of the Income Tax Act regarding a non-arm's length transfer of property from a related corporation (661).

The appellant argued that 661 did not have a tax liability at the time of the transfer because unused non-capital losses from 2002 should have been carried back to 661's 2000 taxation year.

The Tax Court of Canada dismissed the appeal, finding that 661 did not file the prescribed form or make a written request to carry back the 2002 unused losses, meaning the tax liability existed at the time of the transfer.

The Court also upheld the Minister's calculation of interest, confirming that interest accrues on the transferor's tax debt between the end of the year of transfer and the date of the section 160 assessment.

The Appellant's spouse, who had a tax liability, deposited his paycheques into the Appellant's personal bank account because he was unable to open his own account due to criminal charges.

In return, the Appellant paid his credit card bills pursuant to his directions.

The Minister assessed the Appellant under section 160 of the Income Tax Act for the funds transferred.

The Tax Court of Canada allowed the appeal, finding that there was a legally enforceable contract between the spouses and that the Appellant gave valid consideration equal in value to the property transferred by paying the credit card bills.

Therefore, section 160 did not apply.