The appellant, a dentist, sold her dental practice and received $124,000 from her professional corporation on closing.
She was subsequently assessed under section 160 of the Income Tax Act for a tax debt of the corporation.
The appellant argued that the funds were transferred to her solely to facilitate the efficient repayment of patient 'in trust' amounts and corporate creditors, which she promptly did.
The Tax Court of Canada allowed the appeal, finding that the appellant bound herself to use the funds for this purpose, which constituted full consideration for the transfer.
As the corporation received full consideration, section 160 did not apply.
