The appellant appealed an assessment under subsection 160(1) of the Income Tax Act in respect of $224,500 transferred to him by his brother, who had an outstanding tax liability.
The appellant argued the funds were a loan, not a transfer of property.
The Tax Court of Canada rejected this argument, finding the appellant and his brother lacked credibility and failed to establish the existence of a loan.
However, the Court allowed the appeal in part, reducing the appellant's liability to $183,532 to reflect interest on the brother's tax debt that was subsequently forgiven by the Minister, holding that a transferee's joint and several liability cannot exceed the transferor's actual tax liability.
