Federal Appeal


Income tax

Administration and enforcement

Funds became taxpayer’s property when they were deposited into her bank account

Pursuant to direction from optometrist spouse of taxpayer, Ontario Health Insurance Plan (OHIP) deposited $959,403.03 into taxpayer’s savings account, linked to joint chequing account, from 1994 through 1997. Spouse failed to pay $993,730.31 in taxes with respect to 1993 through 1996 taxation years, and owed balance of $145,367.12 as of 2012. Minister of National Revenue assessed taxpayer pursuant to s. 160(1) of Income Tax Act in amount of $959,403.03 with respect to transfers from OHIP to her bank account. Tax Court judge allowed taxpayer’s appeal in part to extent that assessment should be reduced by $3,614.51. Judge held that each time OHIP deposited spouse’s payments into taxpayer’s savings account, there was transfer of those funds to taxpayer and s. 160 of Act was engaged. Judge held that fact that spouse had access to funds through chequing account was not sufficient to reverse triggering of s. 160 of Act. Judge held that taxpayer held legal and beneficial title to funds deposited in her account and it was not necessary that she receive benefit for s. 160 of Act to apply. Judge found evidence that some funds in taxpayer’s savings account were used to pay spouse’s business expenses, so she did give consideration to her spouse in amount of $1,426.60 in 1996 and $2,187.91 in 1997. Taxpayer appealed. Appeal dismissed. Judge did not make any error in determining that funds became taxpayer’s property when they were deposited into her bank account and that spouse transferred property to her by directing OHIP to make these deposits. In order for limiting amount to be amount based on fair market value of property transferred, amount of consideration given by taxpayer would have to have been more than $800,000, so she did not pursue these arguments.

Klundert v. Canada (2017), 2017 CarswellNat 3196, 2017 FCA 134, Dawson J.A., Wyman W. Webb J.A., and Rennie J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 10785, 2016 CarswellNat 2093, 2016 TCC 130, 2016 CCI 130, Valerie A. Miller J. (T.C.C. [General Procedure]).


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