Caplan v. The Queen, 95 DTC 709 (TCC)

The taxpayer's husband contributed $5,500 to her RRSP on March 1, 1986. Her husband's income tax liability for his 1986 taxation year and preceding years would prove to be in excess of $43,000.

In finding that an absolute discharge received by the taxpayer's husband on January 25, 1989, releasing the husband from all claims provable on bankruptcy, eliminated any liability of the taxpayer under s. 160(1), Bell TCJ. noted (following Simard-Beaudry) that the taxpayer's husband was liable for taxes in respect of his 1986 year at the time of the March 1, 1986 transfer even though he had not yet been assessed, and also noted that s. 160 now spoke in the present tense (the transferor "is liable to pay"), with the result that subsequent elimination of the husband's liability eliminated the taxpayer's liability.

Bell TCJ. found that if s. 160(1) had not been amended to speak in the present tense rather than in the past tense, a subsequent discharge from bankruptcy of a transferor of property would not have retroactively eliminated liability of the transferee under s. 160(1).