Marginal note:Liability — non-arm’s length transfers
97.29 (1) If a person transfers property, either directly or indirectly, by means of a trust or by any other means, to the transferor’s spouse or common-law partner or an individual who has since become the transferor’s spouse or common-law partner, an individual who was under eighteen years of age, or another person with whom the transferor was not dealing at arm’s length, the transferee and transferor are jointly and severally or solidarily liable to pay an amount equal to the lesser of
(a) the amount determined by the formula
A - B
- is the amount, if any, by which the fair market value of the property at the time of transfer exceeds the fair market value at that time of the consideration given by the transferee for the transfer of the property, and
- is the amount, if any, by which the amount assessed the transferee under subsection 325(2) of the Excise Tax Act, subsection 160(2) of the Income Tax Act, subsection 297(3) of the Excise Act, 2001 and subsection 80(3) of the Underused Housing Tax Act in respect of the property exceeds the amount paid by the transferor in respect of the amount so assessed, and
(b) the total of all amounts each of which is
(i) an amount that the transferor is liable to pay under this Act, or
(ii) interest or a penalty for which the transferor is liable as of the time of transfer.
However, nothing in this subsection limits the liability of the transferor under any other provision of this Act.
Marginal note:Fair market value of undivided interest
(2) For the purpose of this section, the fair market value at any time of an undivided interest in a property, expressed as a proportionate interest in that property, is, subject to subsection (4), equal to the same proportion of the fair market value of that property at that time.
Marginal note:Rules applicable
(3) If a transferor and transferee have, under subsection (1), become jointly and severally or solidarily liable in respect of all or part of the liability of the transferor under this Act, the following rules apply:
(a) a payment by the transferee on account of the transferee’s liability discharges, to the extent of the payment, the joint liability; and
(b) a payment by the transferor on account of the transferor’s liability discharges the transferee’s liability only to the extent that the payment operates to reduce the transferor’s liability to an amount less than the amount in respect of which the transferee was made jointly and severally or solidarily liable.
Marginal note:Transfers to spouse or common-law partner
(4) Despite subsection (1), if at any time a debtor transfers property to the debtor’s spouse or common-law partner under a decree, order or judgment of a competent tribunal or under a written separation agreement and, at that time, the debtor and the debtor’s spouse or common-law partner were separated and living apart as a result of the breakdown of their marriage or common-law partnership (as defined in subsection 248(1) of the Income Tax Act), for the purposes of paragraph (1)(a), the fair market value at that time of the property so transferred is deemed to be nil. However, nothing in this subsection limits the liability of the debtor under any other provision of this Act.
Marginal note:Related persons
(5) For the purposes of this section,
(a) related persons are deemed not to deal with each other at arm’s length, and it is a question of fact whether persons not related to each other were, at any particular time, dealing with each other at arm’s length;
(b) persons are related to each other if they are related persons within the meaning of subsections 251(2) to (6) of the Income Tax Act, except that references in those subsections to “corporation” are to be read as references to “corporation or partnership”, and references in those subsections to “shares” or “shareholders” are, in respect of a partnership, to be read as references to “rights” or “partners”, respectively; and
(c) a member of a partnership is deemed to be related to the partnership.
(6) The definitions in this subsection apply in this section.
- common-law partner
common-law partner has the same meaning as in subsection 248(1) of the Income Tax Act except that references to “taxpayer” in that definition are to be read as references to “debtor”. (conjoint de fait)
- common-law partnership
common-law partnership has the same meaning as in subsection 248(1) of the Income Tax Act. (union de fait)
property includes money. (bien)
- 2001, c. 25, s. 58
- 2002, c. 22, s. 408
- 2022, c. 5, s. 25
- Date modified: