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Tax Views: Liability in non-arm's length transactions | Vern Krishna

Thursday, May 18, 2017 @ 12:20 PM | By Vern Krishna

As a general rule, a taxpayer is only responsible for his own taxes. However, an individual who receives property, whether directly or indirectly, in a non-arm’s length transaction, can become jointly and severally liable for the transferor’s outstanding taxes as at the date of the transfer if the transfer occurs at less than the fair market value of the property.

The rule also extends to dividends from family corporations. Section 160 of the Income Tax Act is intended to prevent a taxpayer from rendering himself judgment-proof...