Amounts transferred from joint bank accounts to wife constituted transfers from husband to wife

Tax – Goods and services tax – Administration and enforcement

Husband and wife were married and for last 35 years had used joint bank account to pay their personal expenses and expenses of their family. In 2006, husband’s company ceased to carry on its business and in 2009 Minister of National Revenue assessed husband, as director of company, for net tax, penalties and interest under s. 323(1) of Excise Tax Act (ETA). Between March 2013 and March 2014, husband deposited $89,806.72 received as remuneration from employment into joint bank account. Husband entered into consumer proposal under Bankruptcy and Insolvency Act in March 2014. Amounts were transferred from joint bank account to wife’s bank account. In 2016, wife was assessed $90,886.35 under s. 325 of ETA. Wife appealed assessment. Appeal allowed. At commencement of hearing, Crown informed Court that t should reduce Minister’s assessment under s. 325 to $89,806.72. Husband was liable to pay $90,886.35 under ETA, wife was husband’s spouse and wife gave no consideration to husband for transfer of any property. Mere placing of funds in joint account did not constitute transfer. Husband did not defeat or in any way hinder Minister’s efforts to collect any tax he owed by placing his remuneration in joint bank account. Amounts transferred in excess of $1,200 from joint bank accounts to wife during relevant period constituted transfers from husband to wife. Total amount transferred to wife prior to proposal was $34,052 and wife was liable for this amount under s. 325(1) of ETA. Assessment under s. 325(1) of ETA was referred back to Minister for reconsideration and reassessment on basis that wife’s liability under s. 325(1) of ETA was $34,052.

White v. The Queen (2020), 2020 CarswellNat 237, 2020 TCC 22, Steven K. D'Arcy J. (T.C.C. [General Procedure]).

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