An April 16, 2015 Tax Court of Canada case (Benaroch vs. H.M.Q., 2012-4385(GST)G) addressed a series of transfers of tax liabilities. The taxpayer’s spouse (Mrs. A), the Director of a Corporation, had been previously assessed $67,424 for the Corporation’s unremitted GST/HST. Mrs. A transferred cash and otherassets to her spouse (Mr. A), resulting in CRA assessing Mr. A for the GST/HST owed by his spouse(Section 325 of the Excise Tax Act (ETA)).
Assessing a Director for unremitted GST/HST requires CRA to first execute a Writ of Seizure and Sale against the corporation, and have this Writ returned unsatisfied (ETA Paragraph 323(2)(a)). CRA was not able to prove this. As a result, the Mrs. A did not owe taxes under the ETA. Therefore, there was no liabilityto transfer to Mr. A.
For further information see VTN Monthly Tax Update Seminar, Issue No. 411