Kvas – Tax Court of Canada finds that ss. 84(2) and 160 cannot apply to an involuntary dissolution

The general contracting corporation (“CIA”) of two brothers was dissolved for failure to file Ontario corporate tax returns. Although its property legally escheated to the provincial Crown, in fact, the CIA bank account was thereafter used to pay various CIA creditors. CRA treated the CIA property as being distributed to the brothers so as to give rise to s. 84(2) dividends to them, as well as being transferred by CIA to them so as to be the basis for s. 160 assessments of them.

Bocock J found that s. 84(2) could not apply to an involuntary dissolution and, similarly, that s. 160 could not apply because CIA did not take any action to transfer its property to the brothers.

Neal Armstrong. Summaries of Kvas v. The Queen, 2016 TCC 199 under s. 84(2) and s. 160(1).